MILAN, Italy, May 4. The biggest challenge facing the global economy today is not trade disruption, but uncertainty, said Thomas Helbling, Deputy Director of the Asia and Pacific Department at the International Monetary Fund (IMF), during the session “Globalization as a Force for Sustainable Development” at the 58th Annual Meeting of the Asian Development Bank (ADB) in Milan, Trend reports.
“The actual trade shock has been relatively small,” Helbling noted. “The other bigger shock probably at the moment is the uncertainty shock that holds back investment, spending decisions.”
In response to this environment, Helbling emphasized the need for strong risk management and macroeconomic preparedness. “Our message there is risk management – or, as it’s sometimes put, keep your house in order. Be ready and allow for flexibility, not just at the firm, at the micro level, but also at the macro level,” he said.
He urged governments to build and preserve fiscal buffers that can support targeted interventions when necessary. Additionally, he underscored the importance of exchange rate flexibility, particularly for small and open economies.
“Exchange rate flexibility allows for shock absorbers in the absence of financial turbulence,” Helbling said. “That will also provide for flexibility as trade flows, knowledge, and the international division of labor continue to change.”
Helbling’s remarks reinforced the session’s core theme: that global integration, supported by sound policy and adaptability, remains critical for sustainable development amid an evolving economic landscape.