“Our growth projections are down, but do not show a recession,” Georgieva explained in their opening speech before IMF spring meetings and the World Bank, which begin on Tuesday and in which the institution will present its updated forecasts for the world economy.
He President Trump has established a universal tariffs of at least 10% to all products that enter the United States, in force since April 5, and up to 145% to the Chinesebeyond existing taxes before his return to the White House at the end of January.
With “the recent increases in customs rates, pauses, climbs and exemptions, it is clear that the effective rate in the United States has shot at levels that had not been seen in a long time,” said the Chief of the IMF.
Several studies estimate that the tariffs now applied in the United States are around 20%, taking into account the latest exemptions announced on semiconductors and electronic products, a level that has not been reached for almost a century.
Commercial tensions between the United States and China have escalated exponentially. The two main powers of the world are returned and the blows are returned and Beijing, in retaliation, now imposes 125% tariffs on US products.
“This will have consequences because while the big ones face, the smallest countries are trapped in the crossfire. China, the European Union and the United States are the largest importers,” said Georgieva.
What is the consequence? “Size matters and they are able to cause enormous effects to the rest of the world,” he warned.
We can cooperate: IMF
In spite of every Georgieva, he sees opportunities “as long as we respond intelligently”, such as building “a more balanced and more resistant world economy” to crises.
This means the need for all countries to “put their affairs in order” because “there is no room to postpone the necessary reforms”, especially in a world “of greater uncertainty and confronted to frequent shocks.”
This requires “a budget action determined to rebuild the necessary financial space and a gradual adjustment path that respects the budgetary frameworks,” he insisted.
It is also necessary to compensate for the fact that other countries are lagging with respect to the United States in terms of productivity.
Among the solutions defended by the IMF managing director include: “ambitious reforms of the banking sector, capital markets, competition rules, intellectual property law and an adaptation to the uses of artificial intelligence.”
Countries must also correct their main imbalances, in their budgets in some cases, such as in the United States or France, and in their commercial scales in others such as China or Germany.
“In the IMF we know that these rebalanches are difficult, but necessary,” he said.
In a world that is now “multipolar”, “the most important priority is to ensure that we can cooperate”, and the IMF must play a role as “essential place for dialogue,” Georgieva concluded.
