Washington, (EFE) .- The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, said that, in the current context marked by the commercial war initiated by the US, the next economic projections of the agency “will include notable reductions” in terms of growth, “but not recession.”
In his speech prior to IMF spring meetings and the World Bank Group (BM) held next week in Washington, Georgieva also advanced that the agency’s perspective report that directs and will be published on Tuesday will show “increases in inflation forecasts for some countries” due to tariff disputes.
“The volatility of the financial markets has increased. And the uncertainty about commercial policy is huge,” warned the Bulgarian economist at the start of her intervention, in which he stressed that global resilience “is being tested again with the reconfiguration of the world commercial system.”
“To a large extent, what we are observing is the result of an erosion of trust: confidence in the international system and confidence between countries,” Georgieva said regarding the negative and inequality perception that globalization has left in different countries and strata.
The need for states to put self -sufficient states, especially in which it is the responsibility of the industrial and manufacturing sectors, is resurfaced by supported on increasing concerns on national security.
Georgieva indicated that “the short response” with respect to the consequences of these developments is that “they are significant” and listed several, starting with the fact that “the more uncertainty persists” with respect to the erratic offensive tariffs activated by Washington “the greater the cost” for economies, with expensive delays in decisions that concern, for example, for example, for example, for example, for example, for example, for example.
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The managing director also wanted to remember that, as they are barriers to trade, tariffs tend to undermine growth, and pointed out that “it takes time” to get the processes of business relocation crystallized, one of the goals that Donald Trump’s government has said that he pursues with his commercial war.
“Protectionism erodes long -term productivity, especially in smaller economies,” Georgieva added, which warned of the collateral risk that many markets end up flooded with goods from diverted commercial flows because of the strap between powers, as it is feared that may happen with Chinese imports.
With regard to her recommendations to face the current situation, the economist warned that “economies face the new challenges from a weaker initial position, with a public debt load much greater than that of just a few years ago.”
Therefore, most should “take decisive fiscal measures to rebuild their margin of maneuver”, and in the case of those with “unsustainable” liabilities it would be recommended in some cases to “make the difficult decision to opt for a debt restructuring.”
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He also recommended emerging economies to preserve “the flexibility of exchange rates as a shock absorber” and, in general, considered that states “should focus again on internal and external macroeconomic imbalances.”
For practical purposes, Georgieva agglutinated recommendations for the three greatest economies in the world and placed China’s priority in the need to boost and revive its weakened private consumption, while emphasizing the need to progressively reduce US public debt.
In the case of the European Union (EU), the list of priorities was somewhat broader: “Europe needs a bank union. Europe needs a capital market union. And Europe needs less restrictions on internal services,” he said.
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