The global economy enters a new era

In a context of trade tensions and high uncertainty regarding policies, the way forward will be determined by how difficulties are confronted and opportunities are seized.

The international economic system in which most countries have operated for the last 80 years is resetting, marking the beginning of a new era for the world. Existing norms are being called into question, while new ones have yet to emerge. The wave of tariff announcements by the United States, which began in late January with Canada, China, Mexico, and several critical sectors, culminated in the almost widespread imposition of levies on April 2. The effective tariff rate of the United States has risen above the levels reached during the Great Depression, while the responses from its major trading partners have significantly raised the global rate.

As a result, an epistemic uncertainty and unpredictability regarding policies have emerged as the main factors behind economic prospects. If maintained, this sharp increase in tariffs and the resulting uncertainty will significantly slow global growth.

Source: International Monetary Fund (IMF)