Source: International Monetary Fund

April 22, 2025

Speakers:

Pierre‑Olivier Gourinchas, Director, Research Department, IMF
Petya Koeva Brooks, Deputy Director, Research Department, IMF
Deniz Igan, Division Chief, Research Department, IMF

Moderator:
Jose Luis De Haro, Communications Officer, IMF   

Mr. De Haro: OK. I think we can start and we have a quorum. So good morning, everyone, and welcome. I want to welcome also those joining us online. I am Jose Luis de Haro with the Communications Department at the IMF and we are gathered here today for the presentation of our latest edition of the World Economic Outlook titled, “A Critical Juncture Amid Policy Shifts.” I hope by this time you all have had access to the document. If not, I am going to encourage you, as always, to go to IMF.org. There, you are going to find the document, the World Economic Outlook, also Pierre‑Olivier’s blog and many other assets, including the underlying data for some of the charts that are published on the World Economic Outlook.

I also want to plug in that we have a new database portal that I encourage you to use, and what’s best, that to discuss the new outlook that having here with us today, Pierre‑Olivier Gourinchas. He is the Economic Counsellor, the chief economist, and the Director of the Research Department. Next to him are Petya Koeva Brooks, she is the Deputy Director of the Research Department and last, but not least, we also have Deniz Igan, she is the division chief also with the Research Department.

Pierre‑Olivier, as usual is going to start with some opening remarks, and then we are going to open the floor to your questions. I just want to remind everyone that this press briefing, it’s on the record and that we also have simultaneous translation.

So let me stop here. Pierre‑Olivier, the floor is yours.

Mr. Gourinchas: Thank you, Jose. And good morning, everyone. The landscape has changed since our last World Economic Outlook update in January. We are entering a new era as the global economic system that has operated for the last 80 years is being reset. Since late January, many tariff announcements have been made, culminating on April 2, with near universal levies from the United States and counterresponses from some trading partners. The U.S. effective tariff rate has surged past levels reached more than 100 years ago, while tariff rates on the U.S. have also increased.

Beyond the abrupt increase in tariffs, the surge in policy uncertainty is a major driver of the economic outlook. If sustained, the increasing trade tensions and uncertainty will slow global growth significantly. Reflecting this complexity, our report presents a reference forecast which incorporates policy announcements up to April 4 by the U.S. and trading partners. Under these reference forecasts, global growth will reach 2.8 percent this year and 3 percent next year, a cumulative downgrade of about 0.8 percentage points relative to our January 2025 WEO update. Our report also offers a range of forecasts under different policy assumptions.

Under an alternative path that excludes the April tariff announcements, global growth would have seen only a modest downgrade to 3.2 percent this year. We will also use a model‑based forecast to incorporate the temporary suspension of most tariffs announced on April 9, together with the increase in bilateral tariffs between China and the U.S. to prohibitive levels. This pause, even if extended permanently, delivers a similar growth outlook as a reference forecast, 2.8 percent, even if some highly tariffed countries could benefit.

Now, while global growth remains well above recession levels, all regions are negatively impacted this year and next. And the global disinflation process continues, but at a slower pace with inflation revised up by 0.1 percentage point in both years. These trade tensions will greatly impact global trade. We project that global trade growth will be more than cut in half from 3.8 percent last year to 1.7 percent this year. The tariffs will play out differently in different countries. For the United States, the tariffs represent a supply shock that reduces productivity and output permanently and increases price pressures temporarily. This adds to an already weakening outlook and leads us to revise growth down by 0.9 percentage points to 1.8 percent, with a 0.4 percentage point downgrade from the tariffs only. While inflation is revised upwards.

For trading partners, tariffs act mostly as a negative external demand shock. Weakening activity and prices, even if some countries could benefit from trade diversion. This is why we have lowered our China growth forecast this year to 4 percent, while inflation is revised down by 0.8 percentage points, increasing deflationary pressures. All countries are negatively affected by the surge in trade policy uncertainty, as businesses cut purchases and investment, while financial institutions reassess their borrowers’ exposure. Uncertainty also increases because of the complex sectoral disruptions that tariffs could cause up and down supply chains, as we saw during the pandemic.

The effect of these shocks on exchange rates is complex. The tariffs could appreciate the US dollar, as in previous episodes. However, greater policy uncertainty, lower U.S. growth prospects, and an adjustment in the global demand for dollar assets are weighing down on the dollar.

Risks to the global economic have increased and are firmly to the downside.

First, while we are not projecting a global downturn, the risks it may happen this year have increased substantially, from 17 percent projected back in October to 30 percent now. An escalation of trade tensions would further depress growth. Financial conditions could also tighten, as markets react negatively to diminished growth prospects and increased uncertainty. On the flip side, growth prospects could immediately improve if countries ease from their current trade policy stance and promote a new, clear, and stable trade environment.

Addressing domestic imbalances can also help raise growth while contributing significantly to closing external imbalances. For Europe, this means spending more on public infrastructure to accelerate productivity growth. For China, it means boosting support for domestic demand. While for the U.S., it means stepping up fiscal consolidation.

Turning to policies. Our recommendations call for prudence and improved collaboration. Let me outline some key ones. First, an obvious priority is to restore trade policy stability. The global economy needs a clear, stable, and predictable trading environment, one that addresses some of the longstanding gaps in international trading rules. Monetary policy will need to remain agile and respond by tightening where inflation pressures re‑emerge, while easing where weak demand dominates. Monetary policy credibility will be key, especially where inflation expectations might de‑anchor. And central bank independence remains a cornerstone.

Many fiscal authorities will face new spending needs to bolster defense spending or to offset the trade dislocations, likely to come. Some of the poorest countries also hit with reduced official aid could experience debt distress. Yet debt levels are still elevated and most countries still need to rebuild fiscal space, including by implementing structural reforms. Support, where needed, should remain narrowly targeted and temporary. It is easier to turn on the fiscal tap than to turn it off. Where new spending needs are permanent, as for defense spending in some countries, planning for offsetting cuts elsewhere or new revenues should be made.

Finally, even if some of the grievances against our trading system have merit, we should all work toward fixing the system so that it can deliver better opportunities to all. Thank you.

Mr. De Haro: Thank you, Pierre‑Olivier. Before we open the floor to your questions, some ground rules. First of all, if you want to ask a question, raise your hand. If I call on you, please identify yourself and the media outlet you represent. Try to be succinct. Stick to one question. We want to answer as many questions as possible.

And also, a reminder. We are here to discuss the World Economic Outlook. Those questions regarding country programs, institutional issues are going to be better placed for the regional press briefings that are happening later this week and also the Managing Director’s press briefing this Thursday.

With that said, I want hands up. OK. So I am going to start here in the center. Then I am going to move the room to my left. Then to my right. I am going to start with the lady with the green jacket there.

QUESTION: Thank you.. Thanks so much for doing this.

Pierre‑Olivier, I wonder if you can speak a little bit to the fact that you haven’t called out a recession. And you know, we are hearing lots of economists in the United States and other places‑‑most recently yesterday, the IIF is now also forecasting a small recession in the second half of the year. What we see in the WEO is that the percentage of risk of a recession has increased pretty dramatically. Can you walk us through why you are not at this point calling a recession, for instance, likely in the United States and what it would take to tip it that way? Thanks.

Mr. Gourinchas: Thank you, Andrea.

So for the United States, we are projecting a significant slowdown. We are projecting growth will be at 1.8 percent in 2025. And that’s a 0.9 percentage‑point slowdown‑‑revision in our projections from January. But 1.9 percent is obviously not a recession. And the reason for this is is that we have a U.S. economy that, in our view, is coming from a position of strength. We had an economy that was growing very rapidly. We have a labor market that is still very robust. We have seen some signs of weakening and slowdown in the U.S. economy, even before the tariff announcements. So, in fact, the 0.9 percentage point downward revision that I just mentioned, only a part of this‑‑maybe 0.4 percentage points‑‑is coming from the tariffs. Some of that is also coming from weakening momentum. This was an economy that was doing very, very well but was self‑correcting and cooling off a bit on its own. And we were seeing already consumption numbers coming down. We are seeing consumer confidence coming down. So all of that was already factored in. But we are not seeing a recession in our reference forecast.

As you mentioned, Andrea, we are‑‑when we do our risk assessment, if you want, we are seeing the probability of a recession increasing, from about 25 percent back in October to around 40 percent when we assess it now.

Mr. De Haro: OK. I am going to move to this side. The lady here in red.

QUESTION: Good morning.

Pierre, I wanted to ask you about the downward pressure on the dollar now. To what extent you believe it can provide some relief from the pressure on highly indebted emerging economies with a large share of dollar‑denominated debt? And has this downward pressure on the dollar changed your outlook on all of those emerging economies that are still, you know, under the impact of the high debt‑‑as mentioned by the MD in previous meetings, where this high debt is really one of the impediments to growth? Thanks.

Mr. Gourinchas: Yes. So we are seeing a weakening of the dollar that is fairly broad‑based over the last few weeks, as I mentioned in my opening remarks, some of that is coming from the weaker growth prospects in the U.S. Some it is coming from the increased uncertainty. And it’s leading to a reassessment of the global demand for dollar assets. When we step back, we also have to realize we are coming from a position where, over the last few years, there have been tremendous capital inflows into U.S. markets, in particular, risk markets. That’s something that, of course, my colleague Tobias Adrian will talk about in the GFSR press conference. So we are seeing some adjustment, some contradiction. The markets are handling it. We don’t see signs of stress, even in currency markets.

Now, the interesting development is, what does it mean for emerging markets? And you are right to point out that, in the past, when the dollar would strengthen, that would not necessarily be good news for emerging markets because they have dollar‑denominated debts, so that increases their liabilities and the pressure on them to service their debts. And this can lead to some tightening of financial conditions. So we are not seeing that right now. And so that’s a plus. The flip side of this is, of course, the appreciation of some of these emerging markets’ currencies means that they are also losing a little bit on the competitiveness side, so there is maybe something that is a bit easier on the finance conditions, something that is not as easy on the trade side.

Finally, this is an environment of enormous uncertainty, increased volatility. And that I think is something that will dominate for many of the emerging markets. So when we are looking at our assessment, we are actually downgrading the emerging market economies for 2025 and 2026, most of them. Some of them may, as I mentioned, benefit. But overall, as a group, they are downgraded. While because they are also very plugged into the global supply chains, the uncertainty is leading to a pause in investment and activity, and they are going to suffer from the decline in demand for their products coming from the tariffs.

Mr. De Haro: OK. I am going to go with the gentleman here with the glasses.

QUESTION: Thank you. I just have one question. Could you elaborate a little bit on what will happen with the trade flows in your models? I saw that in the basic assumption, the exports from the U.S. are [breaking quite heavily but not that much from China. Why is this so?

And do I understand it right that this basic model does not yet integrate the additional hikes after ‑‑ happening after basically April 9, so above 100 percent on import tariffs by the U.S.? Thanks.

Mr. Gourinchas: So we are seeing a large impact on global trade coming from the tariffs and that’s going to be the case under any combination of tariffs where the effective tariff rates remains very elevated. And the reason why when we looked at the different scenarios that I mentioned, whether it’s a reference scenario or our April 9 scenario which includes lower tariffs on many countries but sharply increased tariffs between the U.S. and China. The overall impact on the global economy is not very different because the effective tariff rate is, if anything, even higher under that pause. So global trade is going to be significantly affected. The particular configuration of trade, which bilateral trade flows are going to be affected versus others that will depend on the final landscape in terms of tariffs so we can anticipate that there will be much lower bilateral trade under either the reference scenario or the April 9, between the U.S. and China. And that is weighing down on global trade growth. This is weighing down on global trade generally.

Mr. De Haro: OK. I am going to turn here to the center. I am going to go to the first row. I am going to go with the lady with the yellow bottle.

QUESTION: Thank you,

You have downgraded the U.K.’s growth forecast quite sharply and given the range of explanations, from higher tariff barriers to more domestic issues, like cost‑of‑living pressures. Out of those, so the global challenges versus domestic challenges, which one is weighing more heavily on the U.K.’s growth forecasts?

Mr. De Haro: OK we are going to open the round of U.K. questions so if you have questions on the U.K., raise your hand. And I will pass the mic to you. I see  two there. Yep.

QUESTION: Hi.

In a world where everyone is warning about the impact of tariffs on U.S. inflation and how much it will raise U.S. prices, why do you have the U.K. with the highest inflation rate in the G‑7 this year? And do you believe tariffs will be inflationary or disinflationary for the U.K.?

Mr. De Haro: OK. Joe here in the first row.

QUESTION: Yeah. Thank you. Thank you very much. So Joel hills from ITV news. Obviously it’s impacting the tariffs are impacting the U.K. They are impacting most countries. I just wonder this, President Trump did say there would be some disruption. He suggested it would be sort of temporary. Is it possible that President Trump is actually a genius? That he knows something you do not?

Mr. De Haro: And I think we have a last question on the U.K. and this is going to be the last question on the U.K. There on the back of the room.

QUESTION: Yeah.

The U.K. inflation forecast is, you know, much higher than we expected it to be, 0.7 percent higher. Is that going to impact on lowering interest rates in the U.K.? And does that affect the growth rate, which seems to be rather optimistic, compared with some of the other European countries?

Mr. De Haro: OK. We are going to be done with the U.K. questions and then we will move along. So Pierre‑Olivier.

Mr. Gourinchas: Thank you. So many questions. Let me address them as best I can. First, on the revision for growth in the U.K. and inflation. So the tariffs are playing a role, as they are in most countries and uncertainty is also playing a role, as it is in all countries. And it’s weighing down on growth in the U.K. But there are some U.K.‑specific factors and I would say that in terms of the zero point 5 percentage point downward revision that we are saying for the U.K., the domestic factors are probably the biggest ones. And in particular, there is a lower carryover from weaker growth in the second half of last year. There is also some tightening of financial conditions, as interest rates have risen, longer‑term interest rates.

On inflation, the revision in inflation in the U.K. is coming, again, from domestic factors, and in particular some change in regulated energy prices. So that’s expected to be temporary but it’s also very U.K.‑specific. The effect of the tariffs on countries like the U.K., like it is on the EU or China is like a negative demand shock. It’s weakening activity but it’s also lowering price pressures, not increasing them.

Now, what is the impact of the tariffs in the medium and long term? Not just what’s going to happen this year and next but what’s going to happen longer term? Our assessment is it’s going to be negative. We have a box in our report that looks at the long‑term impact of the tariffs, if they are maintained. And it is negative for all regions, just like the short‑term impact. So we are seeing a negative impact in the short term, in the medium term, in the long term. Again, there are nuances. Some countries might benefit, depending on the particular configuration of tariffs. It might benefit from some trade diversion; but the broad picture is it’s negative for the outlook.

Now, our ‑‑ and I will end with that. Our forecast for 2025 is slightly higher than OBR’s forecast. Some of this has to do with some of the underlying monetary policy assumptions for the U.K. The bank‑‑

Our assumption for this year is that there are going to be four cuts through the year. One cut already happened. We expect three more.

Mr. De Haro: Thank you, Pierre‑Olivier. I am not going to forget about the people that are on WebEx, and I am going to pass a question there. I see Anton from TAS.

QUESTION: Good morning. Thank you for doing this.

Given the projected slowdown of Russia’s GDP growth from 4.1 in 2024 to 1.5 in 2025, what are the primary factors driving this sharp decline? And how sustainable is Russia’s growth model going forward? Thank you.

Mr. De Haro: Go ahead.

Mr. Gourinchas: Petya, would you like to answer?

Ms. Koeva Brooks: Sure. We are indeed expecting a slowdown in growth to 1.5 this year, and this, to a large extent is kind of the natural slowing of the economy after growing quite robustly in previous years. And also as a result of policy tightening that we have seen, both on the fiscal as well as on the monetary policy side. It is also due to the lower oil prices that have come about as a result of the‑‑as a response to the round of tariffs, as well as the uncertainty about global growth. So all these factors are behind that lower growth number, although I should point out that it is actually a slight upward revision, relative to what we had back in January. And the reason for that is that, again, we actually had seen upward surprises in 2024, which kind of carried into 2025.

When it comes to the medium‑term growth outlook, we do expect that to be relatively weak. We are‑‑we have penciled in growth number of about 1.2, which is down from 1.7 which is what we had before the start of the war.

Mr. De Haro: OK. Let’s continue. I am going to go again in the center and then I am going to go to that side. The lady with the glasses there.

QUESTION: Hi.

In Latin America, we received almost every country 10 percent. So I want to know about the impact of the tariffs in Latin America and if the impact is going to be limited, versus other regions, and when we are going to start to feeling this impact. Thank you.

Mr. De Haro: And before we answer the question, are there any questions on Mexico, Brazil, Argentina? OK. Argentina friends, go ahead.

QUESTION: Hello.

You’ve kept 5.5 growth projection that was decided in the latest program that Argentina signed with the IMF. I would like to know why you are not seeing so much impact yet about‑‑of this general context.

Mr. De Haro: OK. We can go ahead first with the Latin America overview and then we can go to Argentina.

Mr. Gourinchas: I will just say something briefly and then ask my colleague Petya to come in. So for Latin America, as a whole, we are saying activity that is largely driven by consumption on the back of resilient labor markets while investment remains somewhat sluggish. And the slowdown in our projection reflects the impact of tariffs and the global growth slowdown, of course, which is also affecting countries in the region. Policy uncertainty. And the withdrawal of fiscal stimulus and in some countries monetary policy tightening.

Ms. Koeva Brooks: I don’t have a lot to add. Just to say that the disinflation process has also slowed a bit, and this is also‑‑also makes the policy trade‑offs a bit more complicated with slow‑‑with growth slowing down and at the same time, you know, having still challenges on the inflation side.

Mr. De Haro: OK. So we are going to move on. I am going to ask the gentleman in the first row there because‑‑

Oh, sorry. Sorry. I forgot about Argentina. Please go ahead.

Ms. Koeva Brooks: We cannot forget about Argentina.

So the growth forecast for this year‑‑you are right‑‑we still have the upgrade of .5. And this is related to just the positive surprises that we had seen, in spite of a very strong fiscal adjustment, the recovery in confidence I think has definitely played a role in kind of driving us to have this forecast. That said, there are a number of risks related to tighter financial conditions, commodity prices, and a lot of others, which is true for many if not most other countries.

Mr. De Haro: OK. So now we can move on. I am going to go with the gentleman in the first row.

QUESTION: Thank you. In the October 2024 outlook you saw a stable but slow growth for Africa. What’s new now? And what kind of initiatives like the African Continental Free Trade Area do for African economies amidst these trade tensions?

Mr. De Haro: And before we answer, I think‑‑

QUESTION: Hi. Good morning.

One of the things that you mentioned in your report is the demographic shift and the rise in the silver economy. Africa, on the other hand, has the reverse of that. So what is your recommendation in the short and medium term on how to deal with some of these challenges pertaining to tariffs, monetary policy, and now currency exchange? Thank you.

Mr. De Haro: OK.

Mr. Gourinchas: OK. Thank you. I will just say one word about the outlook in sub‑Saharan Africa and then I will ask my colleague Deniz to come in to add more color and answer also the question on the demographic trends.

So regional growth in sub‑Saharan Africa improved significantly last year, to 4 percent. And it will ease in 2025. And this is in line with a softer global outlook. So we are seeing the same forces at play in the region, as we are seeing more globally. And a downturn‑‑and a downward revision in our projection that is of a similar magnitude at about 0.4 percentage point. Deniz?

Ms. Igan: Thank you for the question. So on the demographic shifts, our Chapter 2 basically points out that countries’ age structures are evolving at different rates, as you pointed out as well. We have most western economies, some Asian economies that are aging fast. And you know in a health way some of them. And then we have many sub‑Saharan African countries that have a very young population. And what the chapter shows is actually, there are important medium‑term consequences of that, both for growth, as well as external balances of countries.

In Africa’s case, basically, what we would see is a demographic dividend coming from having a young population. And the question then becomes how best to leverage that, how best to use that and channel it into growth. And the answer there, first and foremost, depends on the structural reforms, the investment that’s necessary on healthcare, on education, on human capital more generally and also international cooperation because our Chapter 3 looks more carefully into migration flows. And again, there, we see migration policy shifts in destination countries has spillovers for other countries. And this is especially true for emerging market economies and lower income economies. So, again, international cooperation there, making sure that growth dividends are utilized in the best way is what we delve into in the chapter.

Mr. De Haro: OK. I am going to go to the gentleman with‑‑raise your hand. Yeah. You. No, I am going back. Then I will go‑‑there you go.

QUESTION: OK. I have a question about China’s growth.

In your World Economic Outlook, you say China’s growth forecast has been cut to 4 percent for this year, which is a 0.6 percentage drop from an earlier projection. But China’s National Bureau of Statistics a couple of days ago predicted China’s growth GDP growth in the first quarter was 5.4 percent. So my question is, how do you see the disparity in the forecast? Is China more optimistic than you are? Thank you.

Mr. Gourinchas: Thank you. So, yes, we are revising our growth projections for China down by 0.6 percentage points, as you have noted. I should flag that this number does not incorporate the latest release for Q1. That came after we closed our round of projections. So this is not reflected there. And we will have to see how it affects our projections when we have our next round of WEO updates.

But let me give you a little bit of perspective on the rationale behind our revision for China. The tariff increase in tariffs especially since China is one of the countries that is facing the most elevated tariffs right now, is going to have a very significant impact in our projections on the Chinese economy. In fact, when we do a decomposition, which I showed during my opening remarks, the impact of the tariffs on the Chinese economy would be a negative 1.3 percentage point revision on growth.

So why do we only have 0.6? Well, because there are other factors that are helping to support Chinese growth in 2025 and 2026. One of which‑‑which is quite important‑‑is the fiscal support that has been announced since the beginning of the year. And that is adding up, something of the amount of 0.5 percentage points. So the impact of the current trade tensions is very significant. It’s partly offset. We expect it to remain quite significant also in 2026 when we also have a downward revision by about 0.5 percentage points.

The other side of this, where we are seeing the impact of the tariffs is on inflation, which is revised down. Our headline inflation projection for 2025 is actually at zero. So it’s down from 0.8 percent to zero. So China is facing stronger deflationary forces as a result of these trade tensions.

Mr. De Haro: OK. I am going to move to this side. The gentleman with the glasses here.

QUESTION: What impact did the oil price also have in exporting and importing countries in the Middle East? Thank you.

Mr. De Haro: Go ahead.

Mr. Gourinchas: So we have seen oil prices declining since our last projections, and the decline in oil prices in our and our interpretation is coming mostly from weaker global demand, so it’s the weakening of global activity that is driving the decline in prices. There has been some increase in supply coming from OPEC Plus countries, but broadly speaking, the decline is mostly coming from weaker demand.

So that is going to play out in ways you sort of would expect. The commodity exporters are going to face lower export revenues from the decline in oil prices. That’s going to weigh on their fiscal outlook, on their growth.

For those countries that are oil importers, it’s going to lower inflation pressures because that‑‑lower oil prices is going to feed into lower headline inflation. It’s going to also provide some modest support to economic activity there.

Deniz, anything to add on oil prices or‑‑or Petya?

Ms. Koeva Brooks: No, I don’t.

Mr. De Haro: OK. We are going to move to the center. I am going to get the gentleman with the white shirt there.

QUESTION: h I am not going to ask another question about the U.K., you will be pleased to know. Over the last week we have seen a number of attacks by the White House on the independence of the Federal Reserve. How destabilizing do you think this might be for financial markets?

Mr. Gourinchas: So central banks are facing a delicate moment. As I have explained in many countries, the impact of the tariffs is going to be to increase recessionary forces and it is going to lower price pressures. And that will help central banks cut interest rates faster and provide some support to their economies. But in other countries ‑‑ and in our projections, the U.S. is in that category‑‑the tariffs are going to increase price pressures. Price pressures in the U.S. are increasing for other reasons as well. Service prices have been quite‑‑inflation of service prices have been quite strong. And that is something that we are seeing already. But the tariffs are likely to increase price pressures. We are projecting inflation to remain at 3 percent in the U.S. this year, the same level as last year, headline inflation.

So in that context, if you also think about where we are coming from, we are coming from a period of very elevated inflation. We are just coming off the cost‑of‑living crisis, a surge in inflation rates to double digits that we haven’t seen in more than a generation. So the critical thing is to make sure that inflation expectations remain anchored, that everyone remains convinced that central banks will do what is necessary to bring inflation back to central bank targets in an orderly manner. And central banks have instruments to do this. They have their interest rate instruments. They have various instruments of monetary policy. But one critical aspect of what they do is coming from their credibility. So central banks need to remain credible. And part of that credibility is built upon their central bank independence. And so from that perspective, it’s very important to preserve that.

Mr. De Haro: OK. We are going to have time for two questions. One of them is going back to WebEx. I see Weier, please. Come in.

QUESTION: Yes.I have a question.

You mentioned that the global economic system is being reset. And I am not sure if one of the early signs in the financial markets, as we see that the markets moving from American exceptionalism to the sort of sell the U.S. narrative. So could you assess the implications for the financial markets and the world economy, as a whole?

Mr. Gourinchas: Yeah, well we have seen some volatility in the markets, of course, whenever there is going to be potentially a significant change in the economic structure of the global economy. I think we are bound to see some reassessment. And investors are going to try to figure out what’s happening, and that’s going to inject volatility. And we are seeing some of that.

The good news is a lot of that volatility we have seen in the last few weeks has not led to significant market dislocations or market stress to levels that would, for instance, have necessitated the interventions by central banks around the world.

So whether you are looking at equity markets, whether you are looking at bond markets, whether you are looking at currency markets, what we are saying is a reassessment of the world we are in now and that means that there is a reassessment of valuations of risk assets, of different currencies. But that is happening in an orderly manner. So from that perspective, we are seeing a system that is quite resilient, that remained resilient but, of course, we are watching carefully and there has been some tightening of financial conditions and that’s something to be looking out for. We want to make sure that it doesn’t get to a level where the stress in the financial system would become too extreme.

Mr. De Haro: OK. The lady here in the first row has been waiting patiently. Please go ahead.

QUESTION: Thank you, Jose. I want to ask about the trading tensions impact on low‑income countries. You mentioned there are like downgrading for emerging markets but how about like those small countries who have lower income as a group, have you assessed the particular impact on them in these ongoing trade tensions? Thank you.

Mr. Gourinchas: OK. Well thanks. For low‑income countries as a group, we are also seeing a downgrade in which we report in our report of 0.4 percentage points. We are expecting growth of 4.2 percent in 2025. So the 0.4 is very similar to what we are seeing at the aggregate levels, 0.5. So from that perspective it looks quite the same. However, there are also a lot of differences across countries, and when we look more carefully, you might see some vulnerable countries, especially in sub‑Saharan Africa. But elsewhere as well‑‑who could face very challenging conditions as a result of the tariffs in an environment in which many of the countries, low‑income countries have been facing a funding squeeze for a number of years now, private capital flows to this region have been drying up or have been coming on very expensive terms. We are seeing a drying up also of some official aid flows. So some of these countries have very limited fiscal space. Near a situation where the situation could become more challenging.

Now, on the flip side, the fact that we are seeing commodity prices coming down for many commodities will help some of them. The commodity importers in that group will hurt the ones who are commodity exporters. And there are a number of countries among the low-income group that are commodity exporters, so that is adding some additional pressure on them.

Mr. De Haro: I am going to make an exception and just one last question. I am going to go with the gentleman in the white shirt there. He has been waiting patiently, too. And don’t get frustrated. There are going to be many opportunities for you to ask questions.

QUESTION: Thank you, Jose. AFP.

I had a quick question about Spain because that’s the only countries among advanced economies where you had an upward revision. It’s going to be way better than the eurozone and even better than other advanced economies. What are the underlying reasons for that? And you formally talked much about tourism but are there any other things that might be pointed out? Thank you.

Mr. Gourinchas: Yes, indeed. Spain is doing better than its peers. Petya, would you like to talk about it?

Ms. Koeva Brooks: Sure. Indeed. We are actually having an upgrade for Spain this year, which is a rare occurrence in the many, many downgrades that we have had for many other countries. This is partly because the Spanish economy just had such strong momentum in 2024, coming into 2025. And part of that was due to the very strong services exports as well as the very strong labor accumulation. Part of that related to immigration. But all of that being said, Spain is still being affected indirectly and directly by the tariffs and the uncertainty associated with that. It’s just that, as I said, that underlying [strength is kind of having a bigger impact in the near term. But then again, in 2026, we do project kind of a slowing of growth to about 1.8.

Mr. De Haro: OK. And on that point, I want to thank you, everyone, on behalf of Pierre‑Olivier, Petya, Deniz, the Research Department, the Communications Department. Some reminders. Next press briefing is going to happen in this same room, Global Financial Stability Report, please stay tuned. Tomorrow you have the Fiscal Monitor, and then later in the week, you have the Managing Director’s press briefing and also all the regional press briefings that we have been talking about. Thank you very much for your time. If you have questions, comments, send them my way to media@imf.org and hopefully you have a great week. I am sure it’s going to be busy.