The IMF warns of a global economic recession due to tariffs and cryptocurrency fluctuations.

The International Monetary Fund (IMF) forecasts a recession in the global economy, primarily due to instabilities arising from tariff policies and fluctuations in the crypto market.

In its latest World Economic Outlook, the IMF said that after experiencing a long and unprecedented series of shocks, the global economy appears to have achieved some stability. However, the intense volatility of cryptocurrencies also increases instability in financial markets.

The IMF warned that the global financial landscape now faces significant risks, as the level of uncertainty has risen to new highs due to President Trump's threat to impose unprecedented high tariffs, coupled with volatility in the value of cryptocurrencies such as Bitcoin and Ethereum.

Trump's tariff policy has forced the IMF to significantly adjust its forecasts for global growth compared to the previous update in January. At the same time, the constant fluctuations of cryptocurrencies have also made investors and financial institutions more cautious in their investment decisions.

"For this reason, we predict that the strong increase on April 2nd in both tariffs and uncertainty will lead to a significant decline in global growth in the short term. While this is our central scenario — or 'baseline forecast' — many paths may emerge, reflecting the unpredictability surrounding future trade policy and the varied impacts of tariffs on different countries through multiple channels.

The common point, however, is that tariffs create a negative supply shock to the economy applying them, as resources are reallocated to produce non-competitive goods, leading to a decrease in overall productivity, a decline in economic activity, and increased production costs along with prices. Furthermore, in the medium term, by reducing competition, tariffs enhance the market power of domestic producers, reduce the incentive for innovation, and create more opportunities for profit-seeking. For trading partners, tariffs are mainly a negative external demand shock, causing foreign customers to shy away from their products, although some countries may benefit from rerouting trade flows.

Moreover, the IMF also emphasized that the volatility of the crypto market could create new challenges for central banks and global financial regulators as they have to find ways to adjust policies to adapt to the rapid development of blockchain technology and cryptocurrencies.

To cope with potential disruptions, the IMF stated that it has revised down its forecast for global trade growth to 1.5%, with a "slight recovery" anticipated for next year. At the same time, the IMF recommends that countries strengthen oversight of the crypto market to ensure the stability and safety of the financial system.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.

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