IMF Sees Significant Risks to Global Growth

[Redator]

While the U.S. dollar is actively losing ground against risk assets, the International Monetary Fund has stated that it sees significant risks to global growth due to renewed tensions between the United States and China.

"If these risks materialize in the form of higher tariffs and disruptions to supply chains, global GDP growth could decrease by 0.3 percentage points," said Krishna Srinivasan, Director of the IMF's Asia and Pacific Department, on Friday.

According to the IMF, this geopolitical factor, paired with domestic economic problems in several countries, is putting pressure on global supply chains, undermining business confidence, and increasing uncertainty about future trade flows. The IMF warns that escalation of the conflict could lead to a significant slowdown in global trade, reduced investment, and weaker consumer demand.

Under these conditions, investors are advised to exercise caution and diversify their assets, taking into account potential risks associated with geopolitical instability and economic turbulence. Alternative asset classes, such as gold and real estate, may serve as protection against inflation and currency fluctuations.

It should be recalled that after several months of fragile stability in U.S.–China relations, tensions have flared up again in recent weeks. Problems began when Washington expanded technological restrictions and proposed imposing tariffs on Chinese ships entering U.S. ports. China responded with similar actions, suggesting tighter controls on the export of rare earth metals and other critical minerals.

Many market participants are closely monitoring the renewed trade tensions between the world's two largest economies. This week, U.S. Treasury Secretary Scott Bessent criticized a senior Chinese trade official, accusing him of arriving in Washington uninvited and behaving inappropriately.

The IMF expects Asia's economic growth to slow to 4.5% this year, compared with 4.6% in 2024, which is still 0.6 percentage points higher than the April forecast. Growth is projected to continue decelerating to 4.1% next year.

Srinivasan highlighted three factors supporting Asia's growth: strong exports, a technology boom, and looser macroeconomic policy supported by favorable financial conditions. However, he warned that risks to the outlook remain tilted to the downside, noting that the impact of tariffs is still being felt and could intensify—along with risk premiums and interest rates—especially if uncertainty in trade policy or geopolitical tensions increase.

For now, however, it is the U.S. dollar that is bearing the brunt, actively losing ground against risk assets throughout the week.

As for the current technical picture of EUR/USD, buyers now need to reclaim the 1.1725 level; only this would allow them to target a test of 1.1750. From there, the pair could climb to 1.1780, although doing so without support from major players would be rather difficult. The ultimate target would be the 1.1820 high. In the event of a decline in the trading instrument, I expect significant buyer activity only around 1.1680. If no one steps in there, it would be prudent to wait for a renewal of the 1.1645 low or consider opening long positions from 1.1610.

As for the current technical picture of GBP/USD, pound buyers need to break through the nearest resistance at 1.3465. Only then could they aim for 1.3490, above which it will be quite difficult to advance. The ultimate target would be around 1.3525. In the event of a decline, bears will try to regain control around 1.3410. If they succeed, a breakout of that range will deal a serious blow to the bulls' positions and push GBP/USD down to 1.3370, with a potential move toward 1.3333.

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