Like the International Monetary Fund (IMF) projects slower growth and higher inflation for some countries, the head of the organization has a striking warning to all countries: obtaining your “houses in order”.
The warning of the director general Kristalina Georgieva comes when the IMF should publish his global economic prospects next Tuesday, which, according to her, will show that although there will be “notable markings”, there will be no recession.
This does not mean, however, that countries will not face difficulties.
“All countries must redouble the efforts to put their own houses in order,” she said in the text of her speech in the United States on Thursday. “In a world of higher uncertainty and frequent shock, there is no room for a delay in reforms to improve economic and financial stability and improve growth potential.”
The comments arise three months in the second term of US President Donald Trump, whose protectionist policies and generalized prices have shaken the world markets and stimulated the concerns of a potential global recession.
Georgieva’s remarks have noted the problems that have occurred in recent months.
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Namely, she said that “uncertainty is expensive”, saying that the cost of an element can be affected by prices in dozens of countries and lead to the postponement of investment decisions, to the volatility of the financial markets, and even to questions about the ports of ships.
She continued by saying that protectionism “erodes long -term productivity, especially in small economies”.
“In the end, trade is like water: when countries set up obstacles in the form of a price and non-coatrated barriers, the flow is turning away,” she said. “Some sectors of certain countries can be flooded by cheap imports; Others may see shortages. Trade continues, but disturbances have costs. ”
In the midst of uncertainty, Georgieva urged countries to adjust tax policies in order to reduce debt levels if necessary, while retaining their “agile and credible” monetary policies.
In recent weeks since the last series of Trump prices entered into force, some central banks seemed to adopt a waiting approach.
Canada Bank on Wednesday has not lowered its reference rateHolding it at 2.75%, the bank stating in a press release that the major change in American trade policy and the unpredictability of prices arouses increased uncertainty, a decrease in perspectives of economic growth and an increase in expectations of inflation.
The president of the American federal reserve Jerome Powell also said in remarks on Wednesday It would probably take a break before reducing interest rates in the middle of concerns about inflation and pricing impacts.
The Bank of England last week also warned that Trump’s import prices have increased the risk of the global economy.
Georgieva said that a second “extremely important priority” is that countries should focus on the correction of internal and external macroeconomic imbalances, although it recognized that it could be difficult.
The director of the IMF recommended by recommending that the three “largest players” – China, the European Union and the United States – take their own actions.
With China, the IMF has recommended that the country be resuming its industrial policies and “the omnipresent involvement of the State” in industry, while increasing “chronically low” private consumption.
Although the IMF notes that the American economy has experienced strong growth in productivity, it must work to put its federal government debt on a “downward path”, which, according to Georgieva, will require significant reductions in the deficit.
She also said that the EU should focus on “assertive budgetary expansion” by Germany to facilitate defense and infrastructure spending, while as a whole, the block must improve competitiveness by “deepening the single market”.
Georgieva says that resilience is tested by a “restart” of the global trade system and that the work must be carried out on commercial policy.
“The objective must be to secure one of the largest players who preserves the opening and offers a playground more level-to restart a global trend towards lower rate rates while reducing non-cramp obstacles and distortions,” she said.
“We need a more resilient global economy, not a drift towards the division.”
– with global news ‘files’ UDAY RANA and the Associated Press
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