On Day Two of the 2025 IMF Spring Meetings, discussions deepened around key structural themes shaping the global economic outlook. Prominent topics included the impact of rising international trade tensions, the challenges and policy responses required to strengthen global financial stability, strategies for restoring market access in IMF program countries, and the economic implications of demographic aging as a potential driver of sustainable growth.
Below, we highlight the most relevant insights of the day, with an emphasis on projections, risks, and strategic recommendations provided by senior IMF leadership.
The Impact of Trade Barriers and the Evolving Global Slowdown
The rise in protectionist trade measures—particularly in the United States—was identified as a major driver behind the ongoing global growth deceleration. The IMF revised its global growth forecast downward to 2.8% in 2025 (from 3.3%) and also cut its projection for the U.S., now expected to grow at only 1.8%.
IMF Chief Economist Pierre-Olivier Gourinchas underscored that the global economy is entering a new phase of structural transition, moving away from the system built over the past eight decades. Trade tensions between the U.S. and China are already reshaping bilateral trade flows and eroding investor confidence—including confidence in the U.S. dollar’s role as a global safe haven. Countries such as Canada and China have implemented retaliatory tariffs, and the European Union has indicated it may follow suit.
Beyond direct trade effects, heightened political uncertainty is further weighing on growth expectations. Specific pressure points were identified in Latin America, China, and oil-exporting economies. The IMF was clear in its message: trade barriers exert a disproportionately negative effect on growth, especially for economies most exposed to global volatility.
Global Financial Stability Report 2025: Lessons for Resilience
The panel on financial stability delivered a clear message: crisis prevention is more effective—and less costly—than crisis response. The IMF advocated for enhanced regulatory frameworks, particularly targeting the non-bank financial sector, including investment funds and private credit vehicles, which have been growing beyond the scope of traditional supervisory systems.
The discussion also addressed the role of blended finance, which combines public and private capital for projects with environmental or social impact. While these instruments are strategically important, they face increasing headwinds in a high-rate environment, including reduced investor appetite and rising cost of capital—especially in developing countries.
Another concern was the insufficiency of statistical data to accurately capture emerging risks, which weakens the ability of regulators to respond effectively. The IMF recommended strengthening judicial and contractual systems, with an emphasis on enabling markets to allocate risk efficiently and avoiding the socialization of losses via public sector bailouts.
To watch: improving risk allocation efficiency reduces the likelihood of fiscal rescues and strengthens the sustainability of public finances.
Re-access to Markets by Countries with IMF Programs
Based on a comprehensive review of 87 IMF programs over the past two decades, the Fund presented strong empirical evidence that well-executed programs significantly reduce the cost of external financing. On average, sovereign spreads decline by approximately 45% within four years following the start of a successful program.
According to the panel, the quality of implementation, rather than the size of the program, is the key determinant of market outcomes. A combination of structural reforms, gradual fiscal consolidation, and debt transparency enhances program credibility and effectiveness. The IMF emphasized that international support must be anchored in solid domestic commitments to deliver sustainable outcomes.
Keep in mind: effective IMF programs are part of integrated macroeconomic strategies, with strong domestic ownership and clearly defined medium- to long-term objectives.
Population Aging: Economic Challenge or Opportunity for Sustainable Growth?
The IMF also turned its attention to demographic transformations. Population aging was reframed not merely as a fiscal or pension challenge, but as a strategic opportunity. According to IMF data, with the right policies in place, global GDP growth could be lifted by 0.3 to 0.6 percentage points annually over the medium term.
To achieve this, the Fund introduced the concept of healthy aging as a strategic tool. Key recommendations included extending working lives, encouraging labor force participation among individuals over 60, and addressing ageism. The IMF highlighted the importance of preventive health measures, continuous reskilling, and labor market reforms that promote longer and more flexible career paths.
To watch: the time to act is now. Countries that succeed in turning longevity into a vector of productivity and innovation will be better positioned for the next phase of global growth.
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Produced by Tatiana Pinheiro, Chief Economist at Galapagos Capital.
