Uncertainty with regard to economic policies is high, the managing director of the International Monetary Fund (IMF) said Thursday.
Kristalina Georgieva said that governments around the world are shifting policy priorities and there are particularly significant policy changes in the US in areas such as trade policy, taxation, public spending, immigration and deregulation, with implications for the US economy and the rest of the world.
She said that governments in other countries are also adjusting their policies, and the combined impacts of possible policy changes are complex and still difficult to assess but will come into clearer view in the months ahead.
Georgieva made the remarks at the conclusion of the First Meeting of the G20 Finance Ministers and Central Bank Governors in Cape Town, South Africa.
She underlined that risks are also diverging, with some upside potential in the US in the short term, where positive sentiment could boost activity.
“But overall risks are to the downside for most other economies, including the risk of policy-induced disruptions to the disinflation process or capital outflows from emerging market economies,” she noted.
She also said the IMF predicted that the world economy will grow by 3.3% in 2025 and 2026, “steady but well below the historic average and in the context of high public debt levels.”
“Underlying this, we see divergences widening across economies, with growth in the US stronger and a somewhat more gradual pickup in the EU than previously expected,” she added.
She noted that the global disinflation process continues.