The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has signaled that another wave of shock is gripping the global economy, aside from the economic challenges of low growth and high debt.
In her latest address ahead of the IMF and World Bank Spring Meetings in Washington, D.C., Georgieva spotlighted a new and more pressing concern: the volatility unsettling the global economy, triggered by rising trade tensions and growing uncertainty in financial markets.
“This resilience is being tested again, by the reboot of the global trading system,” Georgieva said during her speech ahead of the IMF and World Bank Spring Meetings. “Financial market volatility is up. And trade policy uncertainty is literally off the charts, just glance at this figure.”
Georgieva’s warning came as global markets face turbulent times, with rising trade tensions contributing to uncertainty across financial markets. According to the IMF chief, while the global economy had previously shown resilience in the face of crises, the present landscape was more volatile than ever, particularly as key global trade policies continue to shift.
“This is a reminder that we live in a world of sudden and sweeping shifts,” she remarked. “And it is a call to respond wisely. A better balanced, more resilient world economy is within reach. We must act to secure it.”
The IMF Managing Director urged countries to focus on both domestic reforms and international cooperation to weather these shocks. She emphasized that in this environment of heightened uncertainty, nations cannot afford to delay necessary reforms that enhance economic and financial stability.
“The complexity of modern supply chains means imported inputs feed into a broad range of domestic products. The cost of one item can be affected by tariffs in dozens of countries. In a world of bilateral tariff rates, each of which may be moving up or down, planning becomes difficult. The result? Ships at sea not knowing which port to sail to; investment decisions postponed; financial markets volatile; precautionary savings up. The longer uncertainty persists, the larger the cost.”
Georgieva also touched on how rising protectionism and shifting trade policies could affect global growth, saying that tariffs and trade barriers are already driving up costs, particularly for smaller economies dependent on trade for growth.
“Smaller advanced economies and most emerging markets rely more on trade for their growth, and are thus more exposed, including to tighter financial conditions. Low-income countries face the added challenge of collapsing aid flows as donor countries pivot to dealing with domestic concerns,” she said.
However, Georgieva did not shy away from offering a solution. “A better balanced, more resilient world economy is within reach,” she said. “But we must act to secure it.”
