US tariffs: World economy enters new era, says chief IMF economist

By Gokhan Ergocun

ISTANBUL (AA) - The global economy is entering a new era, with effective tariff rates at levels not seen in a century, IMF's chief economist warned on Tuesday.

Pierre-Olivier Gourinchas, citing the IMF's recent report on the global economy, estimated a major downgrade due to escalating trade tensions and high policy uncertainty.

The report forecasted that the global economic growth would be at 2.8% in 2025.

"In the US, tariffs constitute a negative supply shock, with growth revised down and inflation revised up," he said in a statement on X. "For trading partners like China, tariffs are mostly a negative demand shock, with growth and inflation both revised down."

He said the IMF recommends a call for prudence and improved collaboration; the priority should be to restore a clear, stable, and predictable trade environment.

"Monetary policy must remain agile; rebuilding fiscal buffers is crucial, and structural reforms remain needed," he added.