According to the International Monetary Fund (IMF), the global economy has shown some strength in the face of various current challenges, including trade and geopolitical ones, although global growth is expected to moderate this year and next. The institution has noted that, despite this observed resistance, it has not yet faced a definitive test, and there are signs that suggest such a test could be on the way.
“How is the global economy adapting? In short: better than feared, but worse than we need,” said Kristalina Georgieva, managing director of the IMF, in her opening speech to the fall meetings of the IMF and the World Bank in Washington. Georgieva also anticipated that the next ‘World Economic Outlook‘ report will show a moderate slowdown in global growth.
The IMF highlights the adaptation of the private sector to new paradigms such as trade and emerging technologies, including artificial intelligence, which has mitigated the expected impact of tariffs. Even so, commercial opening has experienced significant setbacks. Georgieva highlighted the relevance of the favorable financial conditions that have supported equities, especially due to optimism towards AI and the reduction of the US currency at the beginning of the year.
“But before anyone breathes a big sigh of relief, please hear this: global resilience has not yet been fully tested,” Georgieva warned, pointing to growing demand for gold and the possible not-yet-fully-visible effects of tariffs as indicators of future challenges.
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Georgieva urged governments to focus on a medium-term sustainable growth goal, including increased private sector productivity and regulation that avoids unfair advantages, under robust financial supervision and strong governance. “This is not the time to self-harm: it is time to put things in order,” he concluded.
Likewise, he recommended fiscal consolidation necessary to prepare countries for future shocks and address urgent needs without increasing private sector debt.
