Uncertainty is roiling the financial and trade world, IMF Managing Director Kristalina Georgieva said Thursday (April 24) in Washington, DC. Thousands of journalists, policymakers, bankers and civil society organizations are gathered there for the Spring Meetings of the IMF and World Bank.
“We have significantly downgraded our projections for global growth. Major trade policy shifts have spiked. Uncertainty off the charts. Accompanied by tighter financial conditions and higher market volatility. Simply put, the world economy is facing a new and major test, and it faces it with policy buffers depleted by the shocks of recent years,” Georgieva told reporters at the announcement of the annual Global Policy Agenda for the Fund.
Georgieva urged countries to step back from trade actions and retaliations, which so far are lowering the outlook for global growth.
“First and most urgent for countries to work constructively to resolve trade tensions as swiftly as possible. Preserving openness and removing uncertainty. A trade policy settlement among the main players is essential, and we are urging them to do it swiftly because uncertainty is very costly. I cannot stress this strongly enough: without certainty businesses do not invest, households prefer to save rather than to spend, and this further weakens prospects for already weakened growth,” said Georgieva.
“Uncertainty is really bad for business. So, the sooner there is this cloud that is hanging over our heads is lifted. The better for, prospects for growth,” warned Georgieva
Georgieva noted that even if globalization is rolled back as an engine for growth, lowering trade barriers within regions could take up some of the slack. She pointed to ASEAN and Africa as regions that could particularly benefit from more commerce with their neighbours.
“Africa has so much to offer the world. Obviously they have the minerals, the natural resources, the young population. I think a more unified, more collaborative continent, can go a long, long way to be to be an economic powerhouse.”
But Georgieva ended on a positive note, saying that she is sure that countries will ultimately work together to take practical steps to tackle the biggest issues facing the world.
“Where the expectations are for the outcome of the meetings is, to get more consistency in how all countries are going to go about pursuing their interests, which is legitimate. Of course, every country has to think about its own people, but doing it so in a way that it enlarges the global pie, it doesn't, shrink it,” the Bulgarian concluded.
A copy of the full transcript is available at IMF.org
