IMF's Lagarde Says Economy Faces `Significantly Higher Risks'

The global economy is experiencing slower growth and rising risks, many of which are policy-related and interconnected. Higher tariffs and trade policy uncertainties have led to market volatility and tighter financing conditions, posing risks in a high-debt world. While a global recession is not imminent, the risk of a sharp decline in growth has increased. Policymakers are advised to address vulnerabilities and prepare for potential slowdowns by leveraging existing growth to create policy space. Economies should aim to be more resilient, inclusive, and collaborative, with a focus on reducing government debt, data-dependent monetary policy, and economic reforms.

In what ways can economies become more resilient according to the text?

What role do macro prudential tools play in financial sector stability?