A Delicate Balancing Act: IMF Sees Growth Slowing, Uncertainty Rising Across Economies

Updated: October 08, 2025 23:06

Image Source: Global Times

IMF Managing Director Kristalina Georgieva projected sluggish global economic growth this year and next, cautioning that public debt could surpass 100% of GDP by 2029. She highlighted fiscal vulnerabilities across advanced and emerging markets, potential risks from US tariffs and deficits, and rising uncertainty despite the global economy’s relative resilience.

The International Monetary Fund (IMF) has painted a cautious picture of the global economy, warning that while growth remains “better than feared,” it is likely to stay subdued in the near term amid mounting fiscal and market challenges.

Kristalina Georgieva, IMF Managing Director, said global growth is expected to expand only modestly this year and next, projecting a medium-term average of around 3%, well below the 3.7% recorded before the pandemic. She emphasized that both advanced and emerging economies are grappling with high fiscal burdens and fading resilience.

Key Economic Insights:

Global public debt is forecast to surpass 100% of GDP by 2029, driven largely by excessive fiscal spending and widening imbalances.
Georgieva urged both rich and poor nations to consolidate public finances, rebuild buffers, and avoid policy complacency as uncertainty rises sharply.
The IMF suggested the United States must address its widening federal deficit through sustained fiscal discipline and foster higher household savings to preserve financial stability.

Risks to Global Stability

Georgieva warned that sharp corrections in stock market valuations could hit world growth, particularly harming developing economies more dependent on foreign investment. The IMF also noted that U.S. trade-weighted tariffs—currently at 17.5%, down from 23% in April—could still fuel inflation as imported goods face price pass-throughs.

The ongoing spillover effects from U.S. trade policies and tariff adjustments could compel other nations to raise tariffs in response, potentially amplifying global price pressures. The IMF cautioned that the full economic impact of higher U.S. tariffs has yet to unfold.

Policy Recommendations and Regional Focus

The IMF called for China to adopt a fiscal-structural package that would stimulate private consumption and reduce excessive spending on industrial policy, thereby supporting balanced global recovery.
Adding another layer to the evolving economic landscape, the IMF revealed that monetary gold holdings now exceed one-fifth of the world’s official reserves — a reflection of policymakers’ hedging behavior amid rising uncertainty.
“The level of uncertainty is exceptionally high,” Georgieva said, underscoring that the world’s economic resilience, though notable, remains untested in the face of sustained shocks ahead.

Sources: International Monetary Fund, Reuters, Bloomberg.

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