IMF Sees Resiliency in Global Growth. It’s Premature to Say Tariffs Had Little Impact.

Container ships at the Port of Los Angeles in California. (Eric Thayer/Bloomberg)

Despite tariffs and economic uncertainty, the International Monetary Fund expects the global economy to grow 3.2% this year, just a bit lower than its year-ago forecast. But the IMF’s economics team says it would be “premature and incorrect” to conclude that tariffs didn’t hurt global growth much.

The IMF’s annual world economic outlook forecasts global growth of 3.1% in 2026, down from prepandemic growth of 3.7%.

When U.S. President Donald Trump unveiled a tariff policy hitting trading partners, economists feared a recession and spike in inflation. Companies front-loaded purchases before tariffs went into effect, leaned on hefty profit margins and made other changes to minimize the initial hit. Some countries negotiated lower tariff rates than feared and many of the tariffs didn’t go into effect until August.

But in a blog post, IMF Chief Economist Pierre-Olivier Gourinchas says it is too early to gauge the full impact of tariffs as trade tensions continue to flare. Indeed, Trump on Friday threatened 100% tariffs on China —and there’s no guarantee that trade agreements that have been negotiated will stick.

So far, the IMF says the impact of tariffs is falling on U.S. importers. But some are starting to pass costs on to consumers and trade could reroute permanently, hurting global efficiencies.

Gourinchas notes other economic forces at play in offsetting the impact. In the U.S., tighter immigration policies have shrunk the foreign-born labor supply but cooling demand for labor has kept unemployment steady. Low interest rates and a softer dollar along with heavy artificial-intelligence-oriented investment also has underpinned economic growth.

In China, a weaker exchange rate and rerouting of trade has offered a buffer. German’s willingness to open its coffers for fiscal spending is helping Europe’s growth prospects.

The main risk to the global economy continues to be tariffs and trade tensions. But Gourinchas’ team identified other risks: the possibility that a rtificial intelligence doesn’t live up to its promise, disappointing those who have invested aggressively, and a still worrisome outlook for China’s economy as it dabbles with deflation and deals with the fallout of aggressive spending into solar panels, electric vehicles and other strategic sectors.

Also concerning: fiscal strains in major advanced economies as they grapple with slower economic growth, higher real interest rates, coupled with elevated debt and new spending needs—for defense, economic security, and for climate change. The risk: “It will further tighten the fiscal vise,” Gourinchas writes.

That in turn is putting political pressure on institutions, risking the credibility of central banks—including the U.S. Federal Reserve. “Trust in central banks helps anchor inflation expectations—especially amid shocks, as seen during the recent cost-of-living crisis. As independence erodes, decades of hard-won credibility will vanish, imperiling macroeconomic and financial stability,” Gourinchas cautions.

These risks linger as r ecent resilience in the economy shows signs of fading. “The tariff shock is further dimming already lackluster growth prospects,” Gourinchas says, noting the IMF expects a slowdown in the second half of the year and just a partial recovery in 2026 globally.

In the U.S., he notes that growth is weaker and inflation is higher than the IMF expected last year. The IMF’s advice to policymakers gathering for the annual IMF/World Bank meetings in Washington, D.C., this week: For more sustainable growth, reduce uncertainty, especially on trade, address fiscal vulnerabilities and invest in innovation.

Write to Reshma Kapadia at reshma.kapadia@barrons.com