IMF Warns: Trump's Policies Pose Risks to Emerging Markets
A new report by the International Monetary Fund (IMF) warns of potential risks to emerging markets due to President Trump's policies. The report, 'Global Economic Outlook Executive Briefing', suggests that higher US bond yields and accelerated US-China decoupling could pose significant challenges, particularly for China, Mexico, and South Korea.
The IMF report highlights that Trump's policies could create an 'inflationary perfect storm'. This is due to increased government spending under US pressure, leading to growth in Europe, but also raising the average US tariff to around 15%. This, in turn, could lead to higher inflation.
The report forecasts US economic growth of 1.5% and inflation at 3% in 2025, but acknowledges risks from President Trump's tariffs agenda. Meanwhile, the Bank of England anticipates a 'bumpy path' to inflation at 3.7% before a sharp fall later in the year.
In the UK, GDP shrank 0.1% month on month in May, and prices continued to rise. However, this was before better-than-expected Q2 figures were announced. The EU-US trade deal is considered 'bad' but not as bad as other potential alternatives.
President Trump's policies, including $170bn in funding for new border and immigration controls, could lead to significant deportations and labor market tightness. The IMF report underscores the need for vigilance and preparedness among emerging markets to navigate these potential challenges.
