WASHINGTON — The global economy is holding up better than expected despite major shocks such as President Donald Trump’s tariffs, but the head of the International Monetary Fund says that resilience may not last.
“Buckle up,” Managing Director Kristalina Georgieva said in a speech at a think tank Wednesday. “Uncertainty is the new normal and it is here to stay.”
Her comments at the Milken Institute come on a day when gold prices hit $4,000 an ounce for the first time as investors seek safe haven from a weaker dollar and geopolitical uncertainty and before the IMF and World Bank hold their annual meetings next week in Washington. Trump’s trade penalties are expected to be in sharp focus when global finance leaders and central bankers gather.
The worldwide economy is forecast to grow by 3% this year, and Georgieva is citing a number of factors for why it may not slip below that: Countries have put in place decisive economic policies, the private sector has adapted and the tariffs have proved less severe than originally feared.
“But before anyone heaves a big sigh of relief, please hear this: Global resilience has not yet been fully tested. And there are worrying signs the test may come. Just look at the surging global demand for gold,” she said.
On Trump’s tariffs, she says “the full effect is still to unfold. In the US, margin compression could give way to more price pass-through, raising inflation with implications for monetary policy and growth.”
The Republican administration imposed import taxes on nearly all US trading partners in April, including Canada, Mexico, Brazil, China and even the tiny African nation of Lesotho. “We’re the king of being screwed by tariffs,” Trump said Tuesday in the Oval Office during a meeting with Canadian Prime Minister Mark Carney.
While the US has announced some trade frameworks with nations such as the United Kingdom and Vietnam, the tariffs have created uncertainty worldwide.
“Elsewhere, a flood of goods previously destined for the US market could trigger a second round of tariff hikes,” Georgieva said.
The Supreme Court next month will hear arguments about whether Trump has the authority to impose some of his tariffs under the International Emergency Economic Powers Act.
In her wide-ranging remarks, Georgieva pointed to youth discontent around the world as many young people foresee a future where they earn less than their parents.
“The young are taking their disappointment to the streets from Lima to Rabat, from Paris to Nairobi, from Kathmandu to Jakarta, all are demanding better opportunities,” she said. “And here in the US, the chances of growing up to earn more than your parents keeps falling and here too, discontent has been evident — and it has helped precipitate the policy revolution that is now unfolding, reshaping trade, immigration and many international frameworks.”
She also called for greater internal trade in Asia, more business friendly changes in Africa and more competitiveness in Europe.
For the United States, Georgieva urged the government to address the federal debt and to encourage household saving.
The national debt is the total amount of money that the federal government owes to its creditors. The federal debt has increased from $380 billion in 1925 to $37.64 trillion in 2025, according to Treasury Department data.
The Congressional Budget Office reported in July that Trump’s new tax and spending law will add $3.4 trillion to that total through 2034.
The IMF is a 191-country lending organization that seeks to promote global growth and financial stability and to reduce poverty.
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