In a strongly worded speech to the G20 leaders’ summit in Japan, the head of the IMF said action to reduce obstacles to trade should be a “priority”.

Risks to the global outlook remain “serious”, added Christine Lagarde, even though the Washington-based Fund expects growth to strengthen.

“In my discussions with G20 leaders, I noted that the global economy has hit a rough patch: investment has weakened and trade has slowed significantly, with export and import growth rates at their lowest level since the great financial crisis,” Lagarde said in her concluding address to the meeting in Osaka.

“Even though the IMF expects growth to strengthen somewhat going forward, the risks to the outlook remain serious. 

“Chief among these risks is trade. While the resumption of trade talks between the United States and China is welcome, tariffs already implemented are holding back the global economy, and unresolved issues carry a great deal of uncertainty about the future.” 

The priority, she said, should be to reduce obstacles to trade and to address the underlying sources of trade tensions and distortions. 

The US and China reported this week that talks to resolve outstanding disagreements are now back on track, giving a boost to the global economy.

However, the IMF managing director indicated that this in itself is not enough and deeper reform is needed to the global trading system.

“We need a trading system fit for today’s world which means addressing gaps in the international rule book, including areas like agricultural and industrial subsidies, services and e-commerce,” Lagarde said.

The IMF joined many leaders at the meeting calling for accelerated reform of the World Trade Organization, and also believes further policy action is needed to restore global confidence and help growth.

Lagarde said the G20 should continue its efforts to address a “urgent common issues”, such as corporate taxation and financial regulatory reform.