IMF to G20: Resolving Global Trade Tensions Safeguards Growth

The International Monetary Fund (IMF) has urged G20 finance ministers and central bank governors to give immediate attention to resolving global trade tensions, warning that prolonged friction poses a direct threat to global economic growth and financial stability.

In a prepared statement published on the IMF’s website, Gita Gopinath, First Deputy Managing Director, emphasized that policy uncertainty was a central theme at the third G20 Finance Ministers and Central Bank Governors Meeting held in South Africa. She stressed that effective international cooperation is key to overcoming ongoing challenges.

“The persistence of trade tensions, coupled with weakening demand and growing uncertainty, especially in the U.S. and China, has weighed down global growth prospects,” Gopinath said.

According to the IMF’s April projections, the global economy is expected to grow by just 2.8% in 2025 and 3.0% in 2026, well below the historical average of 3.7%.

The Fund noted shifts in global trade patterns, such as accelerated imports ahead of tariff impositions, a pivot in trade flows toward new partners, and the positive impact of some trade agreements in lowering average tariffs and improving financial conditions.

On inflation, Gopinath observed that slowing demand and energy prices have helped contain price pressures, although inflationary dynamics still vary significantly between countries.

She called on policymakers to implement structural reforms, rebuild fiscal buffers, ensure public debt sustainability, preserve central bank independence, and tailor monetary policy to country-specific conditions.

Regarding domestic revenue mobilization, Gopinath noted that low-income countries could boost revenues by up to 7% of GDP if they fully harness their tax potential. The IMF reiterated its commitment to supporting efforts to improve public spending efficiency, strengthen government investment management, and enhance state institutions, especially in light of constrained fiscal environments and the pursuit of Sustainable Development Goals (SDGs).

The message from the IMF is clear: resolving trade tensions and reinforcing macroeconomic fundamentals is critical to restoring investor confidence, ensuring stability, and unlocking long-term, inclusive global growth.