The global economy is performing better than many feared, yet it still falls short of what is required for robust, long-term prosperity, International Monetary Fund Managing Director Kristalina Georgieva said in Washington on Wednesday.
Georgieva told reporters that the Fund now expects global growth to slow “only slightly this year and next,” supported by unexpectedly strong performance in the United States and selected advanced, emerging market and developing economies. Her comments come ahead of next week’s annual meetings of finance ministers and central bank governors at the World Bank and IMF in Washington.
“All signs point to a world economy that has generally withstood acute strains from multiple shocks,” Georgieva said, citing “improved policy fundamentals,” private‑sector adaptability, lower‑than‑expected tariff effects, and supportive financial conditions.
She warned that the world’s resilience has yet to be “fully tested” and that the full impact of recent tariff measures remains to be seen. Georgieva noted the average US tariff rate has fallen from 23 per cent in April to 17.5 per cent today, while the US effective tariff rate of around 10 per cent remains “far above” the rest of the world.
“The world has avoided a tit‑for‑tat slide into trade war so far,” she added.
The IMF continues to forecast global growth of roughly three per cent over the medium term, broadly unchanged from prior projections but below the pre‑pandemic average of 3.7 per cent. Georgieva highlighted a shifting growth pattern, with China steadily decelerating and India emerging as a key engine of global expansion.
To lift sluggish prospects in many economies, she urged rapid action to “durably” raise output, rebuild fiscal buffers, and correct “excessive” trade imbalances.
Asia: Georgieva recommended deepening intra‑regional trade, strengthening the services sector, and improving access to finance. She said properly implemented reforms could raise long‑run output by up to 1.8 per cent.
Africa: Countries should press ahead with “business‑friendly reforms” and push for implementation of the Continental Free Trade Area, which Georgieva said could boost real GDP per capita by “over 10 per cent.” “Gains from this region can be especially large,” she said.
United States: Georgieva urged the US administration to confront the federal deficit and introduce measures to incentivise household savings.
China: The IMF reiterated calls for fiscal reforms to stimulate private consumption and to reduce reliance on industrial policy as the primary growth driver.
Europe: Georgieva delivered the most pointed critique of Europe’s economic performance, calling for stronger competition and structural reforms. She proposed that the European Union appoint a new “single market czar” to streamline governance and drive integration in financial services and energy, and to help Europe “catch up with the private sector dynamism of the US.” “There will be some sacrifices on the way,” she warned.
Trade policy is expected to dominate discussions at the forthcoming IMF‑World Bank meetings, after a year in which the US imposed broad tariffs on many trading partners. Georgieva’s remarks signal the Fund’s focus on balancing the near‑term resilience of global growth with persistent medium‑term weaknesses and the risks posed by trade tensions.
