Washington: The world economy, battered by trade wars and tech frenzy, stands at a precarious crossroads, warns International Monetary Fund (IMF) Managing Director Kristalina Georgieva.
In a stark alert just days before the IMF-World Bank annual meetings, she declared, “Uncertainty is the new normal — buckle up, everyone.” Her words, delivered in a preparatory speech, rang prophetic as US President Donald Trump swiftly threatened 100 percent tariffs on Chinese imports, retaliating against Beijing’s curbs on rare earth mineral exports.
This fresh escalation has sent global markets into a tailspin, amplifying investor jitters at a time when finance ministers and central bankers are set to dissect the economic fallout in Washington.
Yet, Georgieva highlighted a silver lining: despite early-year shocks, the global economy has shown remarkable grit, growing at a steady three percent clip. Businesses, foreseeing Trump’s protectionist moves, rejigged supply chains and stockpiled goods, averting a full-blown trade clash. Many nations opted for diplomatic pacts over confrontation with the US.
However, there are still significant challenges ahead. New US-China tariff spats underscore lingering trade perils, while geopolitical strains and rising debt burden developing economies. The UN Conference on Trade and Development notes a $500 billion surge in first-half 2025 global trade but warns of fragility.
Enter the AI boom: Investments in data centers, semiconductors, and telecom gear — mostly flowing from Asia to America — fuelled 20 percent of trade growth, according to World Trade Organization data.
Georgieva likened the hype to the 2000 dot-com bubble, cautioning that unmet expectations could trigger a sharp market plunge, as echoed by the Bank of England.
Trump’s tariff tactics, unfunded tax cuts, and jabs at institutions like the Federal Reserve erode US credibility, risking a dollar slump. As Georgieva put it, resilience has limits — the coming months will test global stability like never before. Investors and governments must tread wisely.