The IMF raises alarms over a potential $1 trillion downturn in global output linked to Donald Trump's unpredictable policies. The report highlights how heightened tariffs—reaching a century-high—coupled with political turmoil could trigger a financial crisis compared to the 2008 recession. It cautions investors about the volatility stemming from overvalued US equities and the potential chaos in bond markets as hedge funds face crises. Particularly concerning are the implications for developing nations, which may struggle with high borrowing costs as they adjust to tariffs.
"The IMF is warning of a non-negligible risk of a $1tn hit to global output... equivalent to a third of that experienced in the 2008 crisis."
"This time, the crisis stems not just from markets but from the politics at the heart of the dollar system."
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