WASHINGTON — The global economy has shown stronger than expected resilience despite a series of shocks over recent years, International Monetary Fund Managing Director Kristalina Georgieva said Wednesday, forecasting only a modest slowdown in growth through 2026.
Speaking ahead of the IMF and World Bank annual meetings in Washington, Georgieva said the world economy is doing “better than feared, but worse than needed,” pointing to a growth outlook of roughly 3 percent a rate well below pre-pandemic trends.
The IMF expects global growth to slow only slightly in 2025 and 2026, with updated projections due next week in its World Economic Outlook. In July, the fund raised its global growth forecast by 0.2 percentage point to 3.0 percent for 2025 and by 0.1 percentage point to 3.1 percent for 2026.
Georgieva said recent data showed the U.S. economy had softened but avoided the recession that many economists feared six months ago. She credited improved policy responses, a flexible private sector, and less severe trade barriers than anticipated.
“We see global growth slowing only slightly this year and next,” Georgieva said at an event hosted by the Milken Institute. “All signs point to a world economy that has generally withstood acute strains from multiple shocks.”
The IMF chief, however, warned that uncertainty remains elevated, with geopolitical tensions, shifting trade policies, and rising public debt weighing on confidence.
Economists said the IMF’s cautious optimism reflects the adaptability of major economies but also underscores growing long term vulnerabilities.
The global economy has managed to stay afloat thanks to robust consumer spending and strong labor markets, said David Lin, a senior economist at the Brookings Institution. “But persistent fiscal imbalances and volatile trade policies could derail that progress.”
Others warned that financial markets may be underestimating potential shocks. “Valuations are stretching to levels reminiscent of the late 1990s,” said Elena Ruiz, a market strategist in New York. “A sudden shift in sentiment could have ripple effects, especially for emerging markets.”
The IMF’s medium term growth forecast of around 3 percent falls short of the 3.7 percent average before the COVID-19 pandemic. Global public debt is projected to exceed 100 percent of GDP by 2029, raising concerns about fiscal sustainability.
Meanwhile, demand for gold often seen as a safe haven has surged, with holdings now accounting for more than 20 percent of the world’s official reserves. Gold prices hit a record high Tuesday amid expectations of a US Federal Reserve rate cut and uncertainty over US fiscal policy.
Trade tensions remain a major source of risk. While the US trade weighted tariff rate has eased to 17.5 percent from 23 percent in April, policymakers fear new tariff rounds could reignite inflationary pressures.
Business leaders and workers expressed mixed feelings about the global outlook. Maria Chen, who runs a small electronics export business in Singapore, said fluctuating tariffs have created planning challenges.
“Every few months, the rules change,” she said. “It’s hard to invest when you don’t know what the next policy will be.”
In Nairobi, textile worker James Okoth said rising living costs have offset recent wage gains. “We hear that the world economy is improving, but for us, prices keep going up,” he said. “It doesn’t feel like progress.”
In Washington, analyst Carla Reed noted that consumers remain cautious despite strong job markets. “People are working, but they’re saving more and spending less because of uncertainty,” she said.
Georgieva urged governments to focus on structural reforms to strengthen private-sector productivity, consolidate public spending, and reduce excessive debt. She said countries should address current account imbalances to rebuild fiscal buffers for future shocks.
“The world must prepare for prolonged uncertainty,” Georgieva said. “Competition, rule of law, and sound fiscal management are essential to sustain growth.”
The IMF chief recommended targeted reforms across regions.
- Asia: deepen trade integration and strengthen the service sector.
- Africa: improve business environments to lift real GDP per capita by more than 10 percent.
- Europe: accelerate the single market to match US private sector dynamism.
- United States: implement measures to reduce federal debt and encourage household savings.
- China: boost social spending and restructure the property sector while scaling back industrial subsidies.
Despite resilient growth, the IMF warned the world cannot afford complacency. Elevated debt, geopolitical tensions, and volatile markets could expose underlying weaknesses in the global economy.
“Uncertainty is the new normal,” Georgieva said. “We must buckle up and build resilience for what lies ahead.”