(Bloomberg) -- International Monetary Fund Managing Director Kristalina Georgieva said the world’s policy makers must resolve trade tensions that are posing a mounting risk to the global economy and financial markets.
The outlook remains precarious as trade conflicts, policy uncertainty and geopolitical threats undermine confidence, investment, and growth, Georgieva said in her Global Policy Agenda released Thursday in Washington.
“Trade disputes could spill over to monetary, exchange rate, or financial sector policies, threatening global financial stability and jeopardizing hard-won economic gains,” she said. “The focus must be on reversing tariff increases and finding lasting solutions to trade disputes, including by removing domestic distortions and strengthening the multilateral trading system.”
Georgieva, a former World Bank official who succeeded Christine Lagarde at the start of the month, is calling out the growing dangers two days after the fund projected world trade volume growth will crater this year to 1.1% from 3.6% in 2018, though it also sees some recovery next year. U.S. President Donald Trump’s conflicts with China have cooled somewhat this month but remain unresolved and other disputes are simmering with Europe.
“There are significant risks,” Georgieva said. “Growth could be derailed if trade disputes lead to further cross-border restrictions, including on technology, or incite broader monetary, exchange rate, or financial sector policy actions.”