IMF Chief Kristalina Georgieva Says Global Economy Holding Firm But Clouds Still Loom

The global economy has weathered several major shocks better than expected, showing surprising resilience even as uncertainty grows, according to International Monetary Fund (IMF) Managing Director Kristalina Georgieva.

Speaking at an event hosted by the Milken Institute in Washington on Wednesday, Georgieva noted that the IMF expects only a slight slowdown in global growth this year and next. “We see global growth slowing only slightly this year and next.

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“All signs point to a world economy that has generally withstood acute strains from multiple shocks,” she said, previewing the IMF’s upcoming World Economic Outlook, set for release next Tuesday during the IMF and World Bank annual meetings.

Recent data, she added, shows that while the US economy has softened, it has avoided the recession that many economists had feared six months ago. She attributed this resilience to “better policies, a more adaptable private sector, less severe import tariffs than feared – at least for now – and supportive financial conditions.”

In July, the IMF raised its global growth forecast to 3.0% for 2025 and 3.1% for 2026. However, Georgieva said the new outlook will include a minor downward revision from October’s 3.2% forecast, reflecting persistent uncertainty.

Kristalina Georgieva: “Better Than Feared, Worse Than Needed”: IMF Outlook Stays Cautious

“The world economy is doing better than feared, but worse than needed,” Georgieva remarked, highlighting that medium-term growth is expected to hover around 3% – well below pre-pandemic levels of 3.7%.

She pointed to underlying issues such as rising inequality, economic discontent, and the growing risk of an artificial intelligence-driven market bubble. “What we are seeing is demonstrable resilience in the world,” she told Reuters.

“But we are also saying it is a time of exceptional uncertainty and downside risks are still dominating the forecast. So watch it, don’t get too comfortable.”

Georgieva also noted surging gold prices, which hit a record high above $4 000 an ounce, reflecting investors’ search for safety amid ongoing uncertainty. The IMF expects more room for monetary easing this year.

While the US has seen some tariff relief, with rates falling from 23% in April to around 17.5%, she warned that inflation pressures could return if companies begin passing on tariff costs or if trade frictions flare again.

“Uncertainty is the new normal and it is here to stay,” Georgieva cautioned, urging policymakers to remain vigilant as financial markets approach valuation levels not seen since the dot-com era.

Debt, Reform, and the Path to Sustainable Growth

Turning to structural challenges, Georgieva warned that global public debt is on track to exceed 100% of GDP by 2029. She urged nations to boost productivity, consolidate spending, and reduce excessive debt levels to build resilience against future crises.

“As we have seen, these imbalances can trigger a protectionist backlash and – being mirrored by net capital flows – can fuel financial stability risks,” she said. The IMF continues to push for reforms aimed at strengthening competition, improving governance, and deepening market efficiency.

Georgieva outlined region-specific recommendations: Asia should deepen trade integration and enhance service sector reforms, potentially lifting GDP by 1.8% in the long term. Sub-Saharan Africa could increase per capita GDP by over 10% through business-friendly reforms, while, Europe needs to complete its single market to match US private sector dynamism.

The IMF chief also urged the US to tackle its record debt levels and promote savings, while China should focus on strengthening its social safety nets and reducing industrial policy spending.

“Buckle up,” Georgieva said in closing. “Uncertainty is the new normal and it is here to stay.”

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