The global economy is holding up better than expected despite major shocks such as US President Donald Trump’s tariffs, but that resilience may be short-lived, the International Monetary Fund (IMF) chief said.
“Stay strong,” Managing Director Kristalina Georgieva said Wednesday in a speech at the Milken Institute think tank. “Uncertainty is the new normal and will continue to be.”
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Her comments came on a day when gold prices hit $4,000 an ounce for the first time as investors sought a safe haven from a weak dollar and geopolitical uncertainty. She was speaking before the IMF and World Bank hold their annual meetings in Washington, DC next week. The gathering of world financial leaders and central bankers is expected to focus heavily on President Trump’s trade sanctions.
The global economy is expected to grow by 3% this year, and Georgieva cites a number of factors as reasons for the decline: countries have put in place decisive economic policies, the private sector has adapted and tariffs have turned out to be less severe than initially feared.
“But before everyone breathes a huge sigh of relief, hear this: The world’s resilience has not yet been fully tested, and there are worrying signs that that test may come. Just look at the soaring global demand for gold,” she said.
“We are yet to see the full impact of President Trump’s tariffs. Compressing margins in the United States could lead to greater pass-through, which could lead to higher inflation and impact monetary policy and growth,” he said of Trump’s tariffs.
In April, the U.S. Republican administration imposed import taxes on nearly all U.S. trading partners, including Canada, Mexico, Brazil, China and even the small African nation of Lesotho. President Trump met with Canadian Prime Minister Mark Carney in the Oval Office on Tuesday and said, “We’re the king of being screwed with tariffs.”
The US has announced trade frameworks with countries such as the UK and Vietnam, but tariffs are creating uncertainty around the world.
“Other regions may see a flood of goods that were previously destined for the U.S. market, triggering a second round of tariff hikes,” Georgieva said.
The U.S. Supreme Court is scheduled to hear arguments next month on whether President Trump has the authority to impose some of the tariffs under the International Emergency Economic Powers Act.
ripple effect
In her wide-ranging remarks, Georgieva pointed to the dissatisfaction of young people around the world, as many foresee a future where they earn less than their parents.
“Young people are taking their disappointment to the streets from Lima to Rabat, Paris to Nairobi, Kathmandu to Jakarta. They all want better opportunities,” she said. “And here in the United States, the chances of growing up to earn more than your parents continue to decline, and the dissatisfaction is palpable here as well. And it is helping to reshape trade, immigration, and many international frameworks and fuel the policy revolution that is currently underway.”
He also called for increased domestic trade in Asia, business-friendly changes in Africa, and stronger competitiveness in Europe.
For the United States, Georgieva called on the government to address federal debt and encourage household savings.
The national debt is the total amount of money the federal government owes its creditors. The U.S. federal debt rose from $380 billion in 1925 to $37.64 trillion in 2025, according to U.S. Treasury data.
The Congressional Budget Office reported in July that President Trump’s new tax and spending law would add $3.4 trillion to that total by 2034.
The IMF is a lending institution for 191 countries that aims to promote global growth, financial stability, and reduce poverty.
