Because the International Monetary Fund (IMF) projects slower growth and better inflation for some countries, the organization’s head has a stark warning to all countries: get your “houses so as.”
The warning by managing director Kristalina Georgieva comes because the IMF is ready to release its World Economic Outlook next Tuesday, which she said will show that though there might be “notable markdowns” in growth, there won’t be a recession.
That doesn’t mean, nonetheless, that countries won’t face difficulties.
“All countries must redouble efforts to place their very own houses so as,” she said within the text of her speech in the uson Thursday. “In a world of upper uncertainty and frequent shocks, there is no such thing as a room for delay in reforms to boost economic and financial stability and improve growth potential.”
The comments come three months into the second term of U.S. President Donald Trump, whose protectionist policies and widespread tariffs have rocked world markets and spurred concerns of a possible global recession.
Georgieva’s remarks noted the problems which have are available in recent months.
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Namely, she said “uncertainty is expensive,” saying the fee of 1 item will be impacted by tariffs in dozens of nations and result in the postponement of investment decisions, volatility in financial markets, and even questions on which ports ships should sail to.
She went on to say that protectionism “erodes productivity over the long term, especially in smaller economies.”
“Ultimately, trade is like water: when countries put up obstacles in the shape of tariff and nontariff barriers, the flow diverts,” she said. “Some sectors in some countries could also be flooded by low cost imports; others might even see shortages. Trade goes on, but disruptions incur costs.”
Amid the uncertainty, Georgieva urged countries to regulate fiscal policies as a way to lower debt levels when vital, while also keeping their monetary policies “agile and credible.”
Prior to now weeks since Trump’s latest round of tariffs have come into force, some central banks have appeared to take a wait-and-see approach.
The Bank of Canada on Wednesday didn’t lower its benchmark rate, keeping it at 2.75 per cent, with the Bank saying in a press release that the key shift in U.S. trade policy and tariff unpredictability prompts increased uncertainty, diminished prospects for economic growth and raised inflation expectations.
U.S. Federal Reserve chair Jerome Powell also said in remarks on Wednesday that it will likely have to pause before lowering rates of interest further amid concerns over inflation and tariff impacts.
The Bank of England last week also warned that Trump’s import tariffs have increased the risks of a success to the worldwide economy.
Georgieva said a second “hugely necessary priority” is that countries should renew deal with correcting internal and external macroeconomic imbalances, though she acknowledged it will probably be difficult.
The IMF director went on to recommend that the three “largest actors” — China, the European Union and the U.S. — take their very own actions.
With China, the IMF really useful the country dial back its industrial policies and “pervasive state involvement” in industry, while boosting “chronically low” private consumption.
While the IMF notes the U.S. economy has seen strong productivity growth, it must work on putting its federal government debt on a “declining path,” which Georgieva says would require significant reductions to the deficit.
She also said the EU should deal with “assertive fiscal expansion” by Germany to facilitate defence and infrastructure spending, while as a complete the bloc must improve competitiveness by “deepening the only market.”
Georgieva says resilience is being tested by a “reboot” of the worldwide trading system and work should be done on trade policy.
“The goal should be to secure a settlement amongst the most important players that preserves openness and delivers a more-level playing field — to restart a worldwide trend toward lower tariff rates while also reducing nontariff barriers and distortions,” she said.
“We’d like a more resilient world economy, not a drift to division.”
— with files from Global News’ Uday Rana and The Associated Press
© 2025 Global News, a division of Corus Entertainment Inc.
