WASHINGTON:
Global finance leaders convened in Washington this past week with the hope of gaining clarity on how President Donald Trump’s tariffs would impact the global economy and whether any relief was forthcoming. However, most left the meetings with more questions than answers.
During the International Monetary Fund (IMF) and World Bank Spring Meetings, many attendees expressed concerns over the Trump administration’s mixed signals regarding its tariff demands on trading partners. Despite efforts by finance and trade ministers to meet with US Treasury Secretary Scott Bessent and other key officials, these discussions often did not take place.
For those who did manage to meet with US officials, the message was often one of patience, even as the deadline for the 90-day pause Trump imposed on the steepest tariffs drew nearer.
“We are being told it won’t be that bad,” said Polish Finance Minister Andrzej Domanski. “But I’m afraid the pain will not just be short-term.”
The Trump administration’s primary trade talks during the week focused on Japan and South Korea, but the outcomes remained unclear. Bessent described the talks as “productive,” but no concrete resolutions were reached.
The IMF provided a somewhat optimistic outlook on the global economic impact of the tariffs, lowering growth forecasts for several nations but stopping short of predicting recessions, even in major economies like the US and China.
IMF Managing Director Kristalina Georgieva acknowledged the growing concerns surrounding the uncertainty in the global economy, already grappling with the pandemic, inflation, and geopolitical tensions. However, she expressed hope that ongoing trade negotiations could ease the pressures caused by the tariffs.
Despite the IMF’s more cautious stance, several finance officials privately expressed higher concerns, with some suggesting a recession was more likely than the IMF’s estimated 37 percent chance, according to private sector forecasts.
Rising Debt Concerns
Eric LeCompte, Executive Director of Jubilee USA Network, noted that the IMF’s projections were designed to prevent market panic. Still, private discussions highlighted rising concerns about emerging debt crises, which were overshadowed by tariff negotiations.
Reza Baqir, former governor of Pakistan’s central bank, expressed frustration over the lack of focus on “Financing for Development,” particularly for developing countries in the Global South, questioning who would advocate for this crucial issue moving forward.
Indermit Gill, the World Bank’s Chief Economist, also sounded the alarm on the increasing debt levels faced by emerging markets, noting that the tariffs had contributed to a significant slowdown in trade and foreign direct investment, both essential for the growth of developing economies.
No Shift in US Stance
Policymakers did find some reassurance in Bessent’s comments reaffirming US support for the IMF and the World Bank, despite criticizing their expanding focus on climate, gender, and equality issues.
Market participants were encouraged by Bessent’s earlier remarks, suggesting that the current tariff regime between the US and China was unsustainable and a deal could be reached soon. However, China contradicted Trump’s statements, denying that tariff negotiations were underway, further fueling confusion.
