The global economy appears to be holding up stronger than many analysts initially feared, despite a cocktail of global shocks and rising uncertainties, according to the International Monetary Fund (IMF).
Speaking in Washington on Wednesday ahead of next week’s joint meetings of the IMF and World Bank, the Fund’s Managing Director, Kristalina Georgieva, said the world economy is “doing better than feared, but worse than we need.”
Georgieva noted that global growth is projected to slow only slightly this year and next, buoyed by stronger-than-expected performance in the United States and select emerging markets and developing economies.
“All signs point to a world economy that has generally withstood acute strains from multiple shocks,” she said, highlighting improved policy coordination, resilience in private sectors, and supportive financial conditions.
Trade Tensions and the U.S. Tariffs
The IMF boss also touched on the lingering trade tensions triggered by U.S. President Donald Trump’s sweeping tariffs earlier this year. While global trade has been affected, Georgieva said the world has “so far avoided a tit-for-tat slide into a trade war.”
According to her, the U.S. average tariff rate has eased from 23% in April to 17.5%, still “far above the global average.” She cautioned that the full economic impact of the tariffs “is still to unfold,” stressing that the global economy’s resilience has yet to face its toughest test.
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Growth Outlook and Regional Prescriptions
The IMF expects global growth to hover around 3% in the medium term, consistent with previous forecasts but below the pre-pandemic average of 3.7%.
To rekindle momentum, Georgieva urged governments to lift output, rebuild fiscal buffers, and fix trade imbalances.
She recommended that Asian economies strengthen internal trade and expand their service sectors to boost access to finance — a move that could increase output by up to 1.8% over time.
In Africa, she called for “business-friendly reforms” and renewed commitment to the African Continental Free Trade Area (AfCFTA), saying such efforts could raise real GDP per capita by over 10%.
A Stern Message to Europe
Georgieva’s toughest words were reserved for Europe, where sluggish growth continues to trail the U.S. She urged the European Union to deepen its single market integration, especially in financial services and energy, and even proposed the appointment of a “single market czar” to drive reforms.
“Complete your project and catch up with the private sector dynamism of the U.S.,” she challenged EU leaders.
Tough Talk for the U.S. and China
The IMF chief advised the United States to address its rising fiscal deficit and adopt measures that encourage household savings, while urging China to prioritize fiscal reforms that stimulate private consumption and reduce dependence on industrial policies.
Despite persistent geopolitical and economic headwinds, Georgieva maintained a cautiously optimistic tone, insisting that the global economy’s resilience offers “a reason for hope — but not for complacency.”
