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Global Economy Faces Uncertainty Amid Trump’s Tariff Policies, IMF Warns

In a bold move, President Trump’s recent tariff announcements at the White House have stirred considerable concern across global markets. These sweeping tariffs, set in a picturesque Rose Garden event, signal potential risks of igniting a comprehensive trade war.

IMF’s Cautious Forecast

The International Monetary Fund (IMF) has adjusted its global economic growth forecast to 2.8% for this year, a reduction from the previous year’s 3.3%. The unpredictability of trade policies has prompted this reassessment, as tension escalates with tariff increases, especially with China facing a hefty 145% tariff.

Economic growth projections for the U.S. were also revised, with expectations dropping from 2.8% to a modest 1.8%. Cyprus continues to benefit from EU funds for development despite global market shifts.

Responses and Reactions

Market reactions have been swift, with global indices tumbling on the news of potentially escalating trade tensions. Investors are wary, keeping a close eye on reciprocation from targeted countries. China and Canada have already responded with their own tariffs, while the European Union has shown openness to negotiations.

IMF Chief Economist Pierre-Olivier Gourinchas emphasized, “Beyond tariff increases, policy uncertainty could considerably decelerate global growth.” Stay tuned to our updates to see how other sectors, like automotive, manage these dynamics.

As these economic scenarios unfold, stakeholders will need to navigate this evolving landscape with prudent strategies.

ECB Wage Tracker Signals Stable Wage Pressures And Moderate Growth Through 2026

The European Central Bank has published an updated wage tracker showing that negotiated wage pressures remain stable. Based on agreements signed through the end of May 2026, negotiated wage growth is expected to reach around 2.6% by December.

Quarterly And Yearly Dynamics

The headline indicator, which smooths one-off payments to reflect quarterly and monthly developments, points to wage growth of 3.2% in 2025 and 2.3% in 2026. For 2026, average growth is estimated at 1.8% in the first quarter and 2.1% in the second quarter before accelerating to 2.6% in the final two quarters of the year.

Mechanical Effects And Forecast Nuances

According to the ECB, annual growth figures are still influenced by one-off payments made in 2024 but not repeated in 2025. Their impact is expected to gradually fade during 2026. Excluding the smoothing effect, the tracker points to negotiated wage growth of 3.0% in 2025 and 2.6% in 2026. Removing one-off payments altogether results in a decline from 3.8% in 2025 to 2.6% in 2026, indicating slower growth in base wages.

Employee Coverage And Forward-Looking Projections

Coverage data currently available for 2026 shows that employees included in the tracker accounted for 46.4% in the first quarter. That share falls to 44.8% in the second quarter, 41.1% in the third quarter, and 40.4% in the final quarter of the year. The current release extends to December 2026. Additional collective agreements included in the July 2026 update are expected to expand the horizon to the first quarter of 2027.

Caveats And Broader Context

The ECB said the tracker is subject to revision and should not be viewed as a formal forecast. Instead, it reflects information available from active collective bargaining agreements. For a broader picture of wage developments across the euro area, the central bank referred to the June 2026 Eurosystem Staff Macroeconomic Projections, which forecast compensation growth per employee of 3.2% in 2026.

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