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Global economy performing stronger than predicted despite multiple challenges, says IMF.
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IMF Chief Kristalina Georgieva urges nations to rebuild fiscal strength and promote long-term growth.
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Trade, tariffs, and regional reforms to dominate discussions at upcoming IMF and World Bank meetings.
Global Economy Shows Better-Than-Expected Resilience
The global economy is showing stronger performance than most experts had expected, even though long-term challenges remain. Speaking ahead of next week’s annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington, IMF Chief Kristalina Georgieva said the world economy is doing “better than feared, but worse than we need.”
According to Georgieva, global growth is now expected to slow only slightly in 2025 and 2026. The main support for this steady outlook comes from the United States, as well as other advanced and emerging market economies that have shown greater-than-expected resilience.
She emphasized that while uncertainty continues to affect trade, inflation, and fiscal policy, many countries have managed to adapt and stabilize. The world economy, she said, has handled several “multiple shocks” — including the pandemic, wars, and supply disruptions — better than initially expected.
IMF Chief Kristalina Georgieva Highlights Strength Amid Global Challenges
IMF Chief Kristalina Georgieva explained that the global economy’s resilience is due to improved policy fundamentals, the flexibility of private businesses, and supportive financial conditions. She pointed out that, despite recent tariff changes and trade tensions, the world has so far avoided a full-scale trade war.
One positive sign is that the average U.S. tariff rate has dropped from 23% in April to 17.5% now, although it remains much higher than the global average. Georgieva warned, however, that the true impact of these tariffs will take time to appear. She added that the global economy’s strength has not yet been “fully tested,” implying that future shocks or policy mistakes could still pose risks.
She also stressed that global growth over the medium term is likely to remain around 3%, which is below the 3.7% pre-pandemic average. To improve this outlook, she urged governments to focus on sustainable growth strategies, rebuild financial safety nets, and correct trade imbalances between nations.
Global Economy Needs Reforms to Boost Long-Term Growth
The global economy cannot rely solely on resilience — it needs meaningful reforms to achieve strong, lasting growth. IMF Chief Kristalina Georgieva called on all countries to take “durable actions” to lift output and strengthen fiscal positions.
She said that rebuilding fiscal buffers is crucial for governments to respond effectively to future crises. Many nations spent heavily during the pandemic and global inflation period, which left them with limited budget flexibility. Without restoring financial health, countries could face difficulties in dealing with future global shocks.
She also highlighted the need for policies that reduce inequality and increase job creation, especially in developing economies. Georgieva stressed that balanced and inclusive growth is the only way to sustain long-term progress.
IMF Chief Kristalina Georgieva Outlines Regional Policy Suggestions
IMF Chief Kristalina Georgieva provided different recommendations for different regions to strengthen their economic performance.
For Asia, she urged deeper internal trade, growth in the service sector, and better access to finance. According to her, these reforms could raise regional economic output by up to 1.8% over time. She emphasized that Asia’s strong manufacturing base can be complemented by digital innovation and service-oriented industries.
For Africa, Georgieva called for business-friendly reforms and faster implementation of the African Continental Free Trade Area (AfCFTA). She said that if executed well, this trade initiative could increase Africa’s real GDP per capita by over 10%.
Meanwhile, in Europe, she offered what she called “tough love.” She urged the European Union (EU) to strengthen its internal market by appointing a “single market czar” who can drive reforms in financial services and energy integration. According to Georgieva, completing the EU’s single market project would help Europe “catch up with the private sector dynamism of the U.S.”
Global Economy Outlook: Specific Advice for Major Economies
Turning to major economies, IMF Chief Kristalina Georgieva addressed key challenges faced by the United States, China, and other large players.
For the United States, she recommended reducing the federal deficit and encouraging household savings. Excessive government spending, she warned, could limit fiscal flexibility in the future.
For China, Georgieva reiterated the IMF’s long-standing advice to boost private consumption and reduce reliance on industrial policy for growth. Shifting toward consumer-led expansion, she said, would help stabilize China’s economy and create more sustainable domestic demand.
She noted that both the U.S. and China play crucial roles in global trade and finance. Therefore, their policies significantly impact the entire global economy.
Global Economy Heading Toward Moderate Growth Amid Uncertainty
Overall, the global economy appears to be on a moderate but stable growth path. While the IMF does not foresee a major slowdown, it acknowledges that the world’s recovery remains uneven and vulnerable to future shocks.
IMF Chief Kristalina Georgieva concluded by emphasizing cooperation, innovation, and reform. She said countries must work together to resolve trade issues, support emerging markets, and tackle challenges like climate change and inequality.
Her message was clear: the global economy is doing better than expected — but the world still needs bold actions to ensure lasting and inclusive prosperity.
Conclusion
The global economy is currently stable, thanks to resilient policies and adaptable markets. However, as IMF Chief Kristalina Georgieva pointed out, the recovery is not yet strong enough to guarantee future stability. With the upcoming IMF and World Bank meetings expected to focus on trade, fiscal discipline, and regional reforms, the world’s financial leaders have an opportunity to strengthen growth foundations and build a more balanced economic future.
