The global economy faces rising uncertainty as the International Monetary Fund (IMF) calls on the United States to finalize trade agreements swiftly. IMF Managing Director Kristalina Georgieva, speaking during the IMF’s spring meetings in Washington, warned that unresolved trade tensions, particularly those stemming from former President Donald Trump’s tariff policies, are threatening global growth.
Uncertainty Freezing Investment
Georgieva stopped short of directly criticizing the U.S. administration. However, she stressed that the impact of major trade policy shifts has “spiked uncertainty off the charts.” This economic instability, she explained, discourages businesses from investing and prompts households to save rather than spend—both of which stifle global economic momentum.
“A trade policy settlement among the main players is essential, and we are urging them to do it swiftly,” she said. “Uncertainty is very costly.”
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Market Reaction and Political Moves
Earlier this week, financial markets showed cautious optimism after Trump signaled openness to a potential deal with China. He hinted that any agreement could include significantly lower tariffs than the existing 145%. Still, no formal deal has been signed, and trade negotiations with other nations, including the UK, remain ongoing.
British Chancellor Rachel Reeves is scheduled to meet U.S. Treasury Secretary Scott Bessent to explore the potential for a U.S.-UK trade deal. Yet, Reeves has emphasized that the UK will not rush into an agreement.
IMF Downgrades Growth Forecast
Against this backdrop, the IMF has revised its global growth forecast downward—from 3.3% to 2.8% for 2025. Georgieva said the global economy was on a slow road to recovery after enduring multiple shocks. The escalating trade tensions now risk reversing that progress.
“We were just beginning to regain stability,” she said. “Now we face yet another test.”
Limited Policy Flexibility
The IMF also warned that many nations have little room left for policy action. Years of economic challenges have already stretched their fiscal and monetary tools. The growing pressure from prolonged trade disputes could push vulnerable economies toward deeper troubles.
Georgieva concluded that fund members are growing increasingly anxious. However, she welcomed a recent speech by Secretary Bessent reaffirming support for multilateral financial institutions like the IMF and World Bank, offering a rare note of reassurance amid global uncertainty.
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