IMF warns new US tariffs and AI-driven market risks could reshape growth and inflation worldwide
A new round of US tariff threats and the rapid rise of artificial intelligence (AI) investments are sending fresh shockwaves through the global economy, with major institutions warning that resilience may soon give way to slower growth and heightened volatility.
According to the International Monetary Fund’s (IMF) latest World Economic Outlook, global growth is projected to slow to 3.2 percent in 2025 and 3.1 percent in 2026, as protectionist measures—including US President Donald Trump’s planned 100 percent tariff on Chinese goods—begin to take effect.
The World Trade Organization (WTO) similarly forecasts a sharp deceleration in global trade, with merchandise trade volume growth expected to fall to just 0.5 percent in 2026, down from 2.4 percent this year, as reported by Bloomberg.
The IMF, as cited by The Guardian, described the global economy as showing “unexpected resilience” in the face of tariffs, but cautioned that the full impact is yet to be felt and the outlook for growth remains “dim”.
The Fund noted that businesses and households have so far adapted by accelerating purchases ahead of tariff deadlines and absorbing higher costs, but warned that these measures only delay the effects.
The New York Times reported that while the world economy is slightly stronger than the IMF expected earlier this year, “significant uncertainty remains,” with new tariffs and supply chain disruptions weighing on output.
The IMF’s report stated, “There are increasing signs that the adverse effects of protectionist measures are starting to show,” and highlighted that as the global economy becomes more fragmented, risks to the outlook increase.
The IMF found that the impact of tariffs on prices has so far been muted, but warned that inflationary pressures are building, especially in the United States, where costs are expected to be passed on to consumers in the second half of 2025.
In the United Kingdom, inflation is projected to average 3.4 percent in 2025, the highest in the G7, before easing slightly in 2026.
The AI boom is another critical factor.
As reported by The Guardian, the Bank of England and IMF Managing Director Kristalina Georgieva have both warned that current market valuations, driven by AI optimism, are approaching levels last seen during the dot-com bubble, raising the risk of a “sharp correction”.
The WTO noted that 20 percent of global goods trade growth in the first half of the year was linked to AI-related goods, such as semiconductors and servers.
Debt levels are also drawing scrutiny.
Bloomberg reported that global debt surged by more than US$21tn in the first half of the year, reaching a record US$338tn, a scale of increase last seen during the pandemic.
As policymakers gather in Washington, the IMF’s Pierre-Olivier Gourinchas stressed that “uncertainty is the new normal,” with risks mounting from trade policy, market valuations, and debt.
The IMF and other institutions urge caution as the world economy’s resilience is tested by these converging forces.
