IMF Chief Urges Immediate Action on Trade and Domestic Reforms to Stabilize Global Economy


Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), called for swift action to resolve global trade tensions and implement domestic economic reforms to prevent further instability in the world economy. Speaking at the 2025 World Bank Group/IMF Spring Meetings in Washington on Thursday, Georgieva warned that the global economy is at a critical juncture, with weakened policy buffers from the past few years' shocks leaving countries vulnerable to deeper economic slowdowns.
“The global economy is facing a significant challenge, and the lack of effective policy responses could exacerbate the slowdown," Georgieva said, emphasizing the urgent need for stronger economic action.
Her remarks follow heightened trade tensions, particularly after U.S. President Donald Trump announced new reciprocal tariffs in April. While temporarily paused for 90 days, the tariffs, which include a 10% levy on most imports and higher duties for countries imposing greater tariffs on U.S. goods, have sparked widespread global criticism and raised concerns about the future of international trade.
Georgieva warned that continued uncertainty in global trade could have severe consequences, leading to delayed investments by businesses and reduced spending by households, thus putting further strain on fragile economies. "The cost of prolonged uncertainty for global growth is extremely high. We need to remove barriers and resolve these issues swiftly," she added.
The IMF chief stressed the importance of prioritizing economic stability, beginning with strong fiscal policies at the national level. She urged countries to rebuild fiscal buffers, with targeted fiscal support where needed, particularly in light of ongoing external shocks. She highlighted the need for credible, gradual fiscal adjustments to protect key investments, ensure efficiency in spending, and address long-term priorities.
"For low-income countries, the impact of policy trade-offs will be especially challenging, given tight financial conditions and a global slowdown," Georgieva pointed out.
Georgieva also underscored the need for effective domestic resource mobilization, noting that countries with a tax-to-GDP ratio below 15% are at risk of being unable to sustain essential government functions. She called for careful monitoring of economic data and inflation expectations, advising central banks to balance the need for economic growth with inflation control.
Looking forward, Georgieva outlined specific actions for major economies: “China should focus on boosting private consumption and shifting towards services. The U.S. needs to reduce fiscal deficits, and Europe must complete its single market, enhance banking union, and eliminate internal trade barriers within the EU.”
Georgieva’s address served as a call for urgent cooperation on trade issues and a renewed commitment to domestic reforms to navigate the ongoing global economic challenges.
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Eliana
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