According to the International Monetary Fund (IMF), the customs policy of US President Trump has massive consequences for the economy in Germany and worldwide. The IMF now expects a global growth.
In view of the aggressive customs policy of US President Donald Trump, the International Monetary Fund (IMF) expects global growth. The global economy should grow significantly slower at 2.8 percent than forecast in January. This is a minus of 0.5 percentage points.
With a view to the trade disputes, IMF chief host Pierre-Olivier Gourinchas writes about a “new era” that the global economic system is being adjusted.
German economy continued in a phase of weakness
The expectation was also reduced for Germany: In its economic forecast for the Federal Republic, the IMF is based on zero growth for the Federal Republic. In this year, IMF Germany sees again as a bottom among the G7 industrialized nations.
The IMF is only more optimistic for the coming year: it then expects growth of 0.9 percent – but that is still 0.2 percentage points less than forecast in January.
The upswing therefore ensures increasing consumption through real wage growth and more financial policy scope in Germany, such as the loosening of the debt brake for defense.
Forecast in an extraordinary situation
The IMF emphasizes that the global economic forecast was created under “special circumstances”. “Although many of the US government’s planned customs increases were initially put on hold, the combination of measures and countermeasures has driven customs duties in the United States and a century high worldwide.”
Now there is a risk that the trade voltages will increase from retaliatory measures, and inflation could also be heated again. The uncertainty contains growth.
Also much worse prospects for the USA
According to the forecast, however, the tariffs affect the USA even more negative than in Germany: the US economy should therefore only grow by 1.8 percent in the current year. That is 0.9 percentage points less than expected from the IMF. The optimistic mood in the USA has now turned.
According to the report, the important US trade partner, China, is also severely affected. This year the economy of the People’s Republic should only grow by 4.0 percent – 0.6 percentage points less forecast than before. With China, Trump fought a real trade war, against the People’s Republic he had imposed the highest tariffs with 145 percent.
Fundamental concerns about the US tariffs
According to the IMF, supply chains and financial flows could be dissolved through US customs policy. This could result in great economic faults. Unlike in the last century, the global economy is now economically and financially intertwined.
Protectionism due to high tariffs also leads to a reduction in competition and thus to less incentives for innovation. In general, due to the tariffs, the fund calculates with a decline in overall productivity, which in turn leads to higher production costs and prices.
