Georgieva highlighted the need for Europe to reduce restrictions on internal trade and for China to enhance its social safety net to mitigate precautionary saving.

In response to the tariffs, many firms are cutting back on spending and investment, which has led to increased recession predictions among analysts.

She also called for necessary reforms across nations to address economic imbalances and improve productivity, particularly in banking and competition laws.

Additionally, she stressed the importance of coordinated fiscal actions to rebuild financial space and harness potential growth from advancements like artificial intelligence.

The International Monetary Fund (IMF) has responded to the recent trade tensions following U.S. President Donald Trump's announcement of tariffs on April 2, 2025, known as 'Liberation Day.'

Despite these challenges, the IMF does not predict a global recession for 2025, although it acknowledges a slowdown in economic activity.

Kristalina Georgieva, the IMF's Managing Director, emphasized that while growth projections are declining, they do not signal an impending recession.

Georgieva urged countries to respond wisely to the uncertainty created by these trade tensions and to work towards a more resilient global economy.

Since early April, Trump has imposed tariffs of at least 10% on all imports to the U.S., with rates soaring up to 145% on Chinese products, resulting in the highest effective tariff rates in nearly a century.

In retaliation, China has imposed tariffs of 125% on American goods, exacerbating the trade conflict and affecting smaller countries caught in the crossfire.

As a result of these tariffs, global stock markets have suffered, with the UK's FTSE 100 index experiencing a steep decline of 4.6% compared to a month earlier.

The IMF's forecast indicates a notable markdown in growth projections, with global share prices significantly declining due to heightened trade tensions.