IMF Chief Georgieva Says Calm Global Response to Trump’s Tariffs Helped Boost Growth

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said that the restrained response by most nations to U.S. President Donald Trump’s tariffs has helped strengthen global economic resilience.

She made the remarks during the World Economic Outlook event held as part of the IMF and World Bank Annual Meetings in Washington, D.C. According to Georgieva, the fact that most countries chose not to retaliate and continued to follow established trade rules prevented a damaging escalation of the tariff dispute.

IMF Raises Global Growth Forecast In its latest World Economic Outlook, the IMF raised its 2025 global GDP growth forecast from 3.0% to 3.2%, despite lingering geopolitical and trade tensions.

However, the Fund warned that a potential renewed trade war between the U.S. and China — as threatened by Trump over the weekend — could significantly slow global output and trade flows. Georgieva added that growth has also been supported by the fact that the effective level of U.S. tariffs turned out to be lower than initially projected.

While analysts estimated that Trump’s April tariffs would average 23%, subsequent trade agreements between the U.S., the European Union, Japan, and other partners brought the real figure down to around 17.5%. “The effective tariff — what’s actually collected after exemptions that keep the economy functioning — stands between 9% and 10%, meaning the burden is more than twice as light as we initially thought,”

said Kristalina Georgieva, IMF Managing Director.

Private Sector Agility Helped Stabilize Trade Georgieva also praised the adaptability of private companies, which mitigated the effects of tariffs through inventory stockpiling and supply chain restructuring.

According to her, this corporate agility helped maintain stability across major sectors of the global economy. She also cited better government policies supporting private-sector growth, more efficient capital allocation, and rapid digitalization as key contributors to economic resilience. At the same time, Georgieva warned that stretched valuations in the technology sector could test market stability.

“The tech industry appears overvalued, but if the optimism proves justified, it could lead to higher productivity and faster growth,” she said.

IMF Chief Economist Warns of Potential “AI Bubble” IMF Chief Economist Pierre-Olivier Gourinchas compared the surge in artificial intelligence investments to the dot-com boom of the early 2000s, cautioning that it could lead to a sharp correction in equity markets.

However, he noted that such a downturn would likely not trigger a systemic crisis, as most AI ventures are not heavily debt-financed. Gourinchas emphasized that overheated tech valuations may prompt central banks to tighten monetary policy to contain inflationary pressures.

“If markets rapidly reprice assets, it could dampen consumption, investment, and overall activity,” he warned.

Growth Outlook Remains Resilient According to IMF economists, the upward revision in global growth and moderate rise in inflation reflect a smaller-than-expected impact of Trump’s tariffs, largely offset by new trade agreements and targeted exemptions.

This approach has helped preserve open trade and avoid a broader global slowdown. Gourinchas added that financial conditions remain loose, partly due to a weaker U.S. dollar.

Meanwhile, fiscal policy has turned expansionary in countries like Germany and China, and the U.S. is experiencing an investment boom driven by AI and technology spending.

China Remains a Weak Spot Despite the more optimistic outlook, the IMF warned that China’s growth model remains fragile.

The country still relies heavily on exports, while domestic consumption and services lag behind.

“China’s economy remains dangerously close to a debt-deflation trap,” Gourinchas said, noting that without structural reforms, Beijing will struggle to maintain sustainable growth.

#IMF , #globaleconomy , #TrumpTariffs , #china , #usa

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