If you’ve been watching global markets lately, the mood has been anything but calm. Since U.S. President Donald Trump’s “Liberation Day” tariffs were announced on April 2, share prices have dropped sharply, forecasts have darkened, and the word “recession” has crept back into the headlines. The World Trade Organization says global trade will fall. The Bank of England and the European Central Bank are adjusting their policies. Wall Street is riding daily waves of volatility.
According to the International Monetary Fund (IMF), we’re not heading into a global recession. Not yet.
“Trade tariff uncertainty is literally off the charts,” IMF Managing Director Kristalina Georgieva admitted Thursday. But despite a “notable markdown” in growth projections to be released this week, the IMF’s message is surprisingly upbeat: this is a wake-up call, not a funeral bell.
That message might seem at odds with recent market chaos. The FTSE 100 is down 4.6% over the past month. Firms across industries are slashing spending and postponing investment. Countries are responding to U.S. tariffs with protective measures of their own. In short: the trading environment feels as fragile as it has in years. So why isn’t the IMF panicking?
The answer lies in perspective. According to Georgieva, this isn’t the collapse of the global economy—it’s a stress test of the current system. The “reboot” of global trade policy may be disruptive, but it doesn’t mean the underlying fundamentals of the global economy are broken. However, the test is real—and if countries and institutions don’t act wisely, it could become something much worse.
The IMF’s outlook stresses that recovery is still possible—if countries stop pointing fingers and start cleaning up their own economic houses. Georgieva’s advice is pointed: Europe needs to remove internal trade restrictions and deepen its single market. China should expand its social safety net to reduce excessive household savings. The United States, meanwhile, must address its mounting debt.
In a nod to U.S. concerns, Georgieva also acknowledged that the global trading system hasn’t always delivered fairness. “Trade distortions—tariff and nontariff barriers—have fed negative perceptions of a multilateral system,” she said. In other words, the system needs reform, not rejection.
Still, the current volatility is hard to ignore. Trade tensions have triggered a material rise in perceived risk to global growth, central banks warn. The World Trade Organization’s forecast of declining trade is a stark signal. And with the IMF projecting higher inflation in the wake of new tariffs, both consumers and businesses are likely to feel the pressure.
In the short term, that means companies are facing hard decisions; where to shift supply chains, whether to pause hiring and how to price goods in a volatile market. For investors, it means more whiplash as headlines and policy decisions shift by the hour. For consumers, it may mean paying more at the register.
In the long term, the question is whether this turbulence leads to reform or retrenchment. Will countries work together to create a more balanced trade system? Or will they retreat further into economic nationalism, tightening borders and deepening mistrust?
The IMF is betting on resilience. “A better balanced, more resilient world economy is within reach,” Georgieva said. She also made it clear that it won’t happen on its own. That resilience depends on coordinated action, and a renewed willingness to engage with the very systems currently under fire.
The world may not be in recession—yet. The window for avoiding one is still open. What comes next will depend less on market forces, and more on whether the world’s leaders can meet the moment with more than just rhetoric.
