As global trade tensions escalate amid tit-for-tat tariffs and economic nationalism, IMF Managing Director Kristalina Georgieva delivered a stark warning about the growing risks to global stability. In her Spring Meetings curtain-raiser speech, she urged policymakers to act decisively to build a “better balanced and more resilient world economy.”“We live in a world of sudden and sweeping shifts,” Georgieva said. “And it is a call to respond wisely.” International Monetary Fund (IMF) Managing Director Kristalina Georgieva at the IMF headquarters in Washington, DC, on April 17. (Image: Reuters)
Her remarks come at a time of heightened volatility in financial markets and increasing uncertainty around global trade policies. Citing recent data, Georgieva said that the US effective tariff rate has surged to levels “last seen several lifetimes ago”, while non-tariff barriers and subsidies are on a pronounced upward trend.“Trade tensions are like a pot that was bubbling for a long time and is now boiling over,” she said, blaming an “erosion of trust—trust in the international system, and trust between countries.”Also read: Explained | How Trump’s ‘up to 245%’ China tariffs affect different goods’Everyone Suffers if Financial Conditions Worsen’Georgieva pointed to a trifecta of economic damage from the current trade standoff: uncertainty choking investment, tariffs acting as a tax on growth, and long-term productivity erosion from protectionism.“Ships at sea not knowing which port to sail to; investment decisions postponed; financial markets volatile; precautionary savings up,” she described, warning that “the longer uncertainty persists, the larger the cost.”While the IMF’s upcoming World Economic Outlook is expected to downgrade global growth projections, Georgieva emphasised that the situation is not yet tipping into recession territory. Still, she cautioned that protracted instability “raises the risk of financial market stress” — referencing recent unusual movements in bond and currency markets. “It is not the sort of smile one wants to see,” she said of the distorted yield curve.A Call to Action: Domestic Reform and Global DialogueGeorgieva laid out a three-pronged plan of action for governments: strengthen domestic fundamentals, reduce macroeconomic imbalances, and commit to international cooperation.“In a world of higher uncertainty and frequent shocks, there is no room for delay,” she said, highlighting the need for fiscal consolidation, agile monetary policy, and stronger financial regulation — particularly in emerging markets and low-income countries.“Reforms and rebalancing are for everyone,” she said, spotlighting efforts in ASEAN, Africa, and the Gulf Cooperation Council to adapt to new global realities.’We Need a More Resilient World Economy, Not a Drift to Division’“The goal must be to secure a settlement among the largest players that preserves openness and delivers a more level playing field,” she said. “We need a more resilient world economy, not a drift to division.”She added that cushioning the most vulnerable through smart distributional policies would ensure economic soundness and political sustainability.“In challenge there is opportunity,” Georgieva concluded. “With cool heads, clear vision, and strong will, times of change can be times of renewal. The secret to seizing the moment is to focus all energy not on preserving the old, but on building the new.”Also read: Trump, Italian PM Meloni to address US-Europe tariff tensions
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