“Without certainties, companies don’t invest, and families prefer saving over spending, which further exacerbates the already weak growth outlook,” stated Kristalina Georgieva, urging a reduction in trade barriers, both tariff and non-tariff.
The IMF head argued that the “big changes” resulting from tariff impositions by the United States have led to increased uncertainty, worsening financial conditions, and greater market volatility.
Georgieva noted that the risk of recession in the United States has risen to 37%, compared with the 25% projected in October, prompting her to encourage the country to reduce the budget deficit and clean up public finances.
Regarding the European Union, the IMF Managing Director called for the completion of the single market, the capital markets union, the banking union, and the elimination of intra-bloc trade barriers.
Concerning China, she recommended boosting private consumption and redirecting the economy towards the services sector.
In a broader message, Georgieva advised countries to build crisis buffers, ensure debt sustainability, and pursue “credible adjustment paths” that protect investments, maximize spending efficiency, and allow for future contingencies.
The economist also urged central banks to remain vigilant to data and inflation expectations despite the “delicate balance” of combining economic growth with price control.
Georgieva emphasized the critical importance of central bank independence, referencing comments from the President of the United States concerning the replacement of Jerome Powell, Chairman of the Federal Reserve.
The IMF leader also called for heightened efforts toward economic reforms aimed at increasing productivity and addressing the current environment of sluggish growth and high debt.
“It is time to undertake long-needed but often delayed reforms that create a healthy business environment, prioritize entrepreneurship, reform labor markets, and foster conditions for innovation in a world of rapid technological advances,” she stated.
