IMF chief says lack of retaliation against Trump tariffs aiding global growth

By Karin Strohecker and David Lawder

WASHINGTON (Reuters) -Decisions by astir countries to not retaliate against U.S. President Donald Trump's tariffs are among the apical factors bolstering the planetary economy's resilience, IMF Managing Director Kristalina Georgieva said connected Tuesday.

"The world, truthful far, and I cannot accent enough, truthful far, has opted not to retaliate and to proceed to commercialized beauteous overmuch connected the rules that person existed," Georgieva said during an lawsuit astatine the IMF and World Bank yearly meetings successful Washington, noting that this avoided debilitating tariff escalation.

Earlier connected Tuesday, the money had edged up its 2025 planetary GDP maturation forecast successful its World Economic Outlook to 3.2% from a 3.0% forecast successful July, but warned that a renewed U.S.-China commercialized warfare threatened by Trump could dilatory output significantly.

Also supporting planetary maturation is that the effectual U.S. tariff complaint has travel down from anterior estimates, Georgieva told the Bretton Woods Committee event. After calculating that Trump's tariffs announced successful April would mean 23%, the complaint was reduced by U.S. commercialized deals with the European Union, Japan and different large partners to astir 17.5%, she said.

"The effectual tariff, though, what is being collected erstwhile you get exceptions to accommodate the request for the system to relation well, we cipher them determination betwixt 9% and 10% truthful the load is much than doubly little than we thought it would be," she added.

Other factors propping up the planetary system person been amended policies by countries to boost backstage assemblage improvement and much businesslike allocation of resources, arsenic good arsenic agility by companies to debar the worst effects of the tariffs, by front-loading imports and rapidly rearranging proviso chains.

However, she said the resilience could besides beryllium tested by the stretched valuations successful planetary markets - particularly the tech sector, which has fueled a stellar marketplace rally this year.

"This is simply a bet, precise large bet," she said. "If it pays back, fantastic, past our occupation with debased maturation is gone, due to the fact that we volition spot summation successful productivity and we volition spot an summation successful growth. What if it is either dilatory to travel existent oregon doesn't rather materialize. What then?"

IMF main economist Pierre-Olivier Gourinchas told Reuters earlier that the AI concern roar could pb to a bust akin to the dotcom clang successful 2000 that burns equity investors, but that it would not apt effect successful a systemic situation due to the fact that it has not been heavy funded by debt.

(Reporting by David Lawder and Karin Strohecker, editing by Lincoln Feast.)