By coinnews 
00:00 Speaker A
For more insight on today’s World Economic Outlook, I want to welcome into the program IMF Chief Economist Pierre-Olivier Gourinchas. Pierre, thank you so much for sitting down with me. It is always great to see you.
00:10 Pierre-Olivier Gourinchas
Thank you.
00:12 Speaker A
Uh, you warned today that tariffs and uncertainty around tariffs will lead to a significant slowdown in global growth in the near term. What is the risk of a global recession as well as a recession here in the United States?
00:24 Pierre-Olivier Gourinchas
Well, so we are saying a significant slowdown in growth. We’re projecting 2.8% in 2025, 3% in 2026. That’s down 0.8 percentage point cumulated over these two years at the global level. This is not a global downturn. This is not a global recession. What we’re seeing is an economy that is going to grow at a slower rate, but we’re also seeing a risk of a recession increasing. And when we do our calculations, we run our models, what we find is that at the global level, that probability of a global downturn, if you want, has increased from a little bit more than 15% back in October to about 30% now. So that’s a significant increase, but we’re not there yet. We have run a number of scenarios looking at the different tariff announcements, April 2nd, April 9th, with the pause, et cetera. All of them land us towards this 2.8% that I just mentioned for growth. So this risk of a global downturn is if things were to take a turn for the worse. And if we are looking at the US, since you asked me also about the US. So for the US, growth is also going to be slowing down quite a bit to 1.8% in 2025. Again, not a recession, but the odds of a recession have also increased. They’ve more or less increased from about 25% to close to 40%. So, again, if something were to happen, that would take a turn for the worse, then we could have a recession, but we’re not there.
02:26 Speaker A
In terms of perhaps taking a turn for the better, we’re hearing that Treasury Secretary Scott Besant is saying that, uh, there will be a de-escalation between the US and China in the very near future. He’s saying the goal is not to decouple from China, though he does admit that it will be a slog when it comes to negotiations. He talked about the prospect of trying to get a comprehensive deal in the next two to three years. Of course, this also hinges on China’s side as well. What are your thoughts on that? Uh, is that helpful, or given the length of time, could we still see some sort of decoupling between the two economies? Is there damage that could still be done?
03:05 Pierre-Olivier Gourinchas
Well, it’s certainly something that goes in the right direction, very much in line with what we are calling for. What one of the things we’re seeing right now is not just the fact that we have potentially very elevated tariffs in particular between the US and China, but there is also tremendous uncertainty. So if you’re a business and you’re thinking about where to expand, where to grow your markets, where to source your products or your inputs, it’s very unclear at this point for many of them, and that uncertainty is something that is hurting economic activity in the US and in the world. So anything that will go in the direction of providing more stability, more clarity, and predictability in terms of the trading environment will be very, very welcome. Now, the question is, what will happen in that, during that period of time when things are negotiated? If we get tariffs that remain elevated, or if we still have uncertainty, that will still weigh down on growth. So we would certainly call for all the parties to sit around the table, figure out how they want to handle this, and bring back a certain amount of predictability in the trading environment.