IMF managing director Kristalina Georgieva has urged the US to strike trade deals urgently to limit the damage to the global economy from Donald Trump’s tariff policies.
Speaking at a press conference at the IMF’s spring meetings in Washington, Georgieva declined to criticise the US administration directly; but warned that what she called “major trade policy shifts” had “spiked uncertainty off the charts”.
“A trade policy settlement among the main players is essential, and we are urging them to do it swiftly, because uncertainty is very costly,” she said.
“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.”
Financial markets were buoyed earlier this week by signs of softening in Trump’s stance on trade, with the president suggesting he believed a deal with China was possible, that could result in significantly lower tariffs than the current 145%.
But no deal has yet been signed, and other countries – including the UK – are also in talks with Washington.
Rachel Reeves, the British chancellor, is expected to discuss the prospects for a trade agreement when she meets the US Treasury secretary, Scott Bessent, this week but she said on Wednesday that the UK was “not going to rush” into a deal.
Meanwhile the IMF downgraded its forecasts for global economic growth this week, and warned of further downside risks if the trade war escalated. “Simply put, the world economy is facing a new and major test,” said Georgieva.
She added the situation was particularly challenging because many countries had little room for policy manoeuvre, after already enduring a series of economic shocks in recent years.
Asked what the mood of the delegations from the fund’s member-countries in Washington had been this week, Georgieva said, “the membership is anxious”.
“We were just about to step on the road to more stability after multiple shocks. We were projecting 3.3% growth, and actually we were worried that this was not strong enough – and here we are,” she said. The IMF is now forecasting global growth of 2.8% for this year.
With many multilateral institutions under attack from the Trump administration, Georgieva welcomed a speech by Bessent on Wednesday, in which he said the Bretton Woods institutions – the IMF and the World Bank – had “enduring value”.
after newsletter promotion
“I very much appreciate Secretary Bessent’s reiteration of the US commitment to the Fund and to its role,” she said.
However, Bessent also criticised the institutions fiercely for what he called “mission creep”, and their “sprawling and unfocused agendas”, including issues such as gender and climate change.
Responding to a question about these claims, Georgieva declined to say whether the IMF would continue to work on climate or gender.
But she replied: “I want to say that I actually agree with the secretary on one thing. It’s a very complicated world, a world of massive challenges of all kinds.” Stressing that the Fund was a “very fiscally disciplined institution”, she added: “Yes, we have to focus.”
