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The International Monetary Fund (IMF) appears to have recognized that communication is no longer subordinate to economic design — it can make or break reform and change, especially where trust in institutions is thin and fiscal room is limited. The IMF’s latest Fiscal Monitor dedicates a chapter to public consent as a precondition for good policy. Whether governments seek to phase out energy subsidies, reform pensions, or expand tax bases, success now hinges on how well reforms are explained, sequenced, and backed by credible commitments.

The report uses large language models to build a new Reform Sentiment Index, analyzing over two million news articles from 170 countries since 1990. The results highlight four enduring patterns. First, macroeconomic conditions matter: reforms are more likely to succeed during stable growth and low inflation periods. Second, communication quality is decisive: policies land better when governments clearly explain why changes are needed and how they will unfold. Third, targeted compensation works: well-communicated transfers for affected households can soften resistance; diffuse or opaque benefits often fail. Finally, timing and trust are central: reforms implemented outside election cycles and in settings with higher institutional credibility enjoy greater public acceptance.

These findings are not academic abstractions. They reflect lessons from dozens of contested reforms in the Global South. In Indonesia and the Philippines, phased implementation and public dialogue helped anchor energy subsidy reforms. In Ecuador (2019) and Sudan (2022), abrupt price increases without adequate preparation triggered street protests and reversals. In Pakistan and Ghana, repeated program breakdowns are as much a function of eroded public legitimacy as fiscal mismanagement. Reforms now live or die on spreadsheets and in the contested terrain of public perception. For policymakers, this means treating communication not as a postscript but as core infrastructure.

The Global Financial Stability Report (GFSR) takes this further. It links policy ambiguity and weak signaling directly to financial stress. Using measures of geopolitical risk and economic policy uncertainty, the IMF shows how unclear or inconsistent communication widens risk premia, drives capital flight, and exacerbates volatility. These effects are especially pronounced in emerging markets with thin buffers and open capital accounts. Financial markets, like citizens, respond to coherence. Vague central bank guidance, unclear fiscal frameworks, or opaque debt restructuring plans now generate market reactions well before any data release or budget vote. Sovereign spreads, currency pressures, and investment decisions increasingly reflect what governments do and how credibly they are seen doing it. In that environment, expectation management is no longer optional but macro-critical.

The World Economic Outlook (WEO) adds a longer-term lens, focusing on the demographic transitions confronting many middle-income economies. Aging populations will place a growing strain on pensions and public healthcare. Structural reforms — longer working lives, pension eligibility changes, expanded labor participation — are fiscally necessary but politically unpopular. These are intertemporal trade-offs: today’s costs in exchange for tomorrow’s sustainability. However, reforms will be cast as austerity, not solvency, unless that bargain is made clear. The WEO underscores that political acceptance depends on a credible narrative. Where communication fails, reforms do not stick.  That lesson is consistent across the Fund’s work.

A single through-line emerges across the April 2025 flagship reports: communication failure is now a structural policy risk. Moreover, the costs are compounding. When reforms collapse repeatedly, a deeper erosion sets in. Citizens grow cynical. Expectations shift from reform to reversal. This “reform fatigue” weakens state capacity, narrows the scope for action, and raises markets’ premium on policy continuity.

The implications go beyond national governments. Global convenings, including the IMF–World Bank Spring Meetings, are intended to coordinate and communicate. However, for many developing countries, these gatherings can feel like set pieces — complex, hierarchical, and difficult to engage meaningfully. If policy legitimacy depends on communication, then institutional platforms must also evolve. Dialogue must move from performance to participation. Institutions, too, must speak clearly — and listen more.

The stakes are high for developing economies, especially. Reforms in these contexts are often externally financed, technically guided, and politically fragile. If sentiment turns, the window for action closes fast. Therefore, the quality of communication is not an accessory — it is the very ground on which fiscal, monetary, and structural reforms stand. In short, public sentiment has become a binding constraint — not because democracy has intruded on policy — but because, without legitimacy, there is no policy. Without clarity, there is no legitimacy. In a fragmented world, communication is no longer the last mile of policy. It is the first.

Udaibir Das is a Distinguished Fellow at ORF America, Visiting Professor at NCAER, Senior Non-Resident Adviser at the Bank of England, Senior Adviser to the International Forum for Sovereign Wealth Funds, Distinguished Visiting Faculty at the Kautilya School of Public Policy, and Senior Advisor at the Toronto Centre. He previously held roles at the BIS, IMF, Reserve Bank of India, and Bank of Guyana.  

The US wants to be the permanent global hegemon. BRICS+ must boost regional trade and build alternative financial infrastructure.

The Illusory Truth Effect — a psychological phenomenon where repeated exposure to falsehoods makes them seem true—has become a cornerstone of modern political propaganda. A 2023 study in Public Opinion Quarterly found that by the end of his first term, President Trump had made an estimated 30,573 false claims. The study showed how the repetition of these claims powerfully shaped public misperceptions—regardless of their factual basis.

Emboldened by its political traction, he has leaned even more heavily on this misinformed narrative in his second term.

US, a beneficiary of globalisation

In reality, the global trading system — far from exploiting the US —has been largely shaped by it to serve its own strategic and economic interests. For decades, the US has been a primary beneficiary of globalisation, enjoying access to cheaper goods, global expansion of its multinationals, dominance in high-value services, and outsized profits in finance and tech.

US GDP per capita has consistently outpaced global averages; since 1991, the gap has widened by 70 per cent, from $31,866 to $54,296. While critics like JD Vance argue that globalization has made US firms complacent by enabling them to outsource instead of innovate, evidence suggests otherwise.

In 2024, US firms again led the world in patent grants in the US — 157,955 — far ahead of China, Japan, Germany, and South Korea. The tech sector alone generates nearly $2 trillion in GDP and employs 9.3 million Americans. In frontier fields like AI and quantum computing, the US remains at the cutting edge.

Logic of US deficits

Trade deficits, often painted as a sign of decline, actually reflect the US’s singular macroeconomic position. America funds these deficits through capital inflows, enabled by the global demand for the dollar. As the world’s most preferred reserve currency, the dollar draws investment from corporations, banks, sovereign wealth funds, and central banks across the world into US assets — bonds, stocks, real estate, and start-ups.

This “exorbitant privilege” allows the US to borrow in its own currency, while others must earn dollars to pay for imports. Goods flow in due to domestic demand, but so does capital —offsetting the trade deficit.

When channelled productively, these inflows have long supported strong economic growth, as noted by the Center for Global Development. These deficits are not inherently harmful; their impact depends on how the capital is used.

Moreover, the outcome of current US trade policies may not reduce fiscal or trade imbalances. Much will depend on how they influence investor confidence and growth expectations.

US policy failure

The real driver of economic discontent in the US isn’t globalization — it’s domestic policy failure. The global trading order has worked well for the US as a whole, but its gains have been unevenly shared. This failure of redistribution, not trade, fostered the victim narrative and created fertile ground for disinformation.

Beneath the economic rhetoric lies a deeper geopolitical anxiety: the erosion of American hegemony, especially by a rising China. China is rapidly closing the gap with the US across sectors, triggering tensions typical of power transitions. Vance’s remarks at the American Dynamism Summit laid bare this concern: “The idea of globalization was that rich countries would move up the value chain… But as [poor countries] got better at the low end, they also started catching up on the high end.”

The US, assuming permanent dominance, is now grappling with the unsettling reality of competition in manufacturing, innovation, and design.

This hegemonic unease isn’t limited to China. Trump’s tariffs in his first term did reduce the bilateral deficit with China but merely diverted trade to other competitors, drawing his attention to new rising economies.

BRICS agenda

Meanwhile, the broader Global South — led by BRICS+ — is voicing dissatisfaction with the dollar-dominated system. It is exploring trade in local currencies, developing alternative payment systems, and even proposing a common BRICS currency. Though still early, these moves signal a shift toward a more multipolar global financial order.

The US’s strategic objective is now clear: to slow or block the rise of rivals before they undermine American dominance and the privileges that come with it. As the rules-based order is increasingly reshaped by unilateralism and strategic competition, emerging economies must respond with collective purpose.

They must move beyond symbolic alliances and transform BRICS+ into a coherent economic bloc, promote regional trade integration, invest in shared technological capabilities, and build independent financial infrastructure. Diversifying value chains and strengthening domestic resilience is essential — not just for growth, but for asserting agency in an evolving global order.

The writer is Senior advisor Trade, Technology and Skills Unit, NCAER. Views expressed are personal.