The risks to global growth are mounting amidst market turbulence and trade uncertainty, IMF Director of Monetary and Capital Markets Department Tobias Adrian said Tuesday (April 22) in Washington, DC.
“So, our baseline assessment for global financial stability is that risks have been increasing. And they're really two main factors here. One is that the overall level of policy uncertainty has increased. And the second factor is that the forecast of economic activity going forward is slightly lower,” said Adrian at the launch of the Global Financial Stability Report at the IMF Spring Meetings.
Equity and securities markets have been falling as the US Trump Administration has rolled out tariffs and trade actions, answered by counter measures by other countries. But so far, markets are doing what they are supposed to do and functioning smoothly the head of the IMF’s Monetary and Capital Markets Department said.
“You know there's a repricing relative to the higher level of uncertainty. But you know, as I said at the beginning, there's both upside and downside risk. And we could certainly see upside if uncertainty is reduced going forward. And market conditions have been quite orderly. The moves are notable in treasuries, in equities, in exchange rates, but they are within. Like movements we have seen in recent years and really reflect the higher level of volatility.”
When asked about how the gold has been rising, and currency exchange have showed volatility Tobias noted it’s too early to tell long-term implications.
“The cumulative inflows into bonds and stocks from around the world have been quite pronounced. So to what extent these movements in the exchange rate and any associated flows are just a temporary or a more permanent impact remains to be seen and it really depends on how the current uncertainty is going to be resolved. And as I said at the beginning, there are various scenarios. And for the moment, it's highly uncertain. As I said earlier, it is notable that the dollar declined. But I wouldn't jump to conclusions in terms of how permanent that move may be,” said Adrian.
The GFSR said that macroprudential issues put in place since the 2008 global financial crisis seem to be working at this poing, with banking showing resiliency in the face of market rumbling.
“It is the policy framework around the banking system and the non-banks that are so important to create resilient and deep financial markets that are then facilitating adjustments relative to new policy developments. And from that vantage point, I think... And even though we have seen the level of uncertainty increase, you know, markets have been very orderly and we think that the regulatory and policy framework is very key for that achievement,” Adrian finished.
A full copy of the report can be found at: https://www.imf.org/en/Publications/GFSR/Issues/2025/04/22/global-financial-stability-report-april-2025
