IMF says global economy is more resilient than expected

Kristalina Georgieva, former Vice-President of the European Commission and now Managing Director of the International Monetary Fund (IMF), stated that the global economy has shown greater resilience than many had expected, despite facing multiple major shocks.

She projected that global growth will likely see only a slight slowdown this year and in 2026. Recent economic reports indicate that while the US economy is losing some momentum, it has so far avoided the recession many analysts had warned about over the past six months.

Georgieva attributed this resilience to sound policy decisions, a dynamic private sector, milder-than-anticipated import tariffs, and generally favourable financial conditions that have helped sustain economic strength in the US and other major economies.

Georgieva points out several serious challenges dragging behind the global economy 

During an event organised by the Milken Institute in Washington, Georgieva said, “We see global growth slowing only slightly this year and next.”

At this time, the economy was demonstrating all signs indicating a world economy that had generally encountered serious strains from multiple shocks. The managing director’s remarks were part of her preview for the IMF’s upcoming World Economic Outlook.

In July, the agency increased its prediction for global economic growth by 0.2 % points to 3.0% for 2025 and by 0.1 % points to 3.1% for 2026. For a new economic outlook, the IMF will share it on Tuesday, October 14, at the annual IMF and World Bank meetings in Washington.

This situation arises as US President Donald Trump implements high tariffs and stringent immigration policies, affecting global trade. On the other hand, AI is playing a crucial role in the economy as it has swiftly transformed the tech sector and job prospects. 

“The global economy is doing better than expected, but worse than needed,” said Georgieva. The IMF has set a target of about 3% for global economic growth in the medium term. This target is considerably lower than the 3.7% target set before the COVID-19 crisis.

Concerning the lower target, Georgieva highlighted serious circumstances, such as marginalisation, dissatisfaction, and struggles that many individuals around the globe encounter, concluding that the global economy is facing various risks.

Uncertainties surrounding the global economy increase amid changing US tariff rates

Earlier, Georgieva mentioned that uncertainty surrounding the global economy is very high and still continues to rise even as the appetite for gold — considered a safe haven for many investors — grows. She also noted that monetary gold now represents over 20% of the world’s official reserves.

Her remarks followed recent reports, which revealed that gold achieved a record high as the US government shutdown continued, and bets that the Federal Reserve would cut interest rates this month spurred demand.

The impact of Trump’s tariffs, on the other hand, was not as severe as reported in April. Today, the trade-weighted tariff rate is approximately 17.5%, which is lower than the 23% rate. Additionally, most countries are not retaliating by imposing their own tariffs.

However, analysts have raised concerns about the changing US tariff rates, pointing out that inflation in the country could escalate if companies begin passing more of their costs from tariffs onto consumers or, for that matter, if a large number of products meant for the United States end up creating new tariff increases elsewhere.

Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.