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Investing.com -- The global economy has shown greater resilience than anticipated despite facing multiple shocks, according to International Monetary Fund Managing Director Kristalina Georgieva, who forecasts only a slight slowdown in worldwide growth for 2025 and 2026.
Speaking at a Milken Institute event in Washington on Wednesday, Georgieva noted that the U.S. economy had avoided a recession that many experts had predicted just six months ago. She attributed this resilience to better policies, a more adaptable private sector, less severe import tariffs than feared, and supportive financial conditions.
"We see global growth slowing only slightly this year and next. All signs point to a world economy that has generally withstood acute strains from multiple shocks," Georgieva said, previewing the IMF’s upcoming World Economic Outlook.
In July, the IMF raised its global growth forecast to 3.0% for 2025 and 3.1% for 2026, representing increases of 0.2 and 0.1 percentage points respectively. The organization will release fresh projections next Tuesday during the annual IMF and World Bank meetings in Washington.
These meetings come as U.S. President Donald Trump has implemented steep tariffs affecting global trade and tightened immigration policies, while artificial intelligence continues to transform technology and labor markets.
Georgieva described the world economy as "better than feared, but worse than needed," pointing out that the IMF’s medium-term global growth forecast of roughly 3% falls below the 3.7% projected before the COVID-19 pandemic.
She highlighted several risks facing the global economy, including exceptionally high and rising uncertainty levels. This uncertainty is reflected in surging demand for gold, with holdings of monetary gold now exceeding 20% of the world’s official reserves.
The U.S. trade-weighted tariff rate currently stands at around 17.5%, down from 23% in April, and countries have largely avoided retaliatory tariffs. However, Georgieva warned that U.S. inflation could increase if companies pass through more tariff costs to consumers or if goods previously destined for the U.S. trigger additional tariff hikes elsewhere.
Financial market valuations are approaching levels last seen during the dot-com boom 25 years ago, she cautioned. An abrupt shift in market sentiment similar to the March 2000 crash could negatively impact global growth, particularly for developing nations.
"Buckle up," Georgieva advised. "Uncertainty is the new normal and it is here to stay."
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