IMF says world economy holding up despite recent trade shocks

IMF Managing Director Kristalina Georgieva said during a visit to Kyiv on Jan. 15 that the fund’s forthcoming World Economic Outlook will underscore the global economy’s resilience in the face of recent trade shocks, while cautioning that the balance of risks remains to the downside. The WEO update is scheduled for Jan. 19 to coincide with the IMF and World Bank annual meetings in Washington.

“More of the same – that the world economy is remarkably resilient, that trade shock has not derailed global growth, that risks are more tilted to the downside, even if performance now is fairly strong,” Georgieva said, previewing the report. She signaled the IMF may again nudge its headline forecasts upward slightly, noting that the World Bank had revised its outlook up earlier in the week, although she stopped short of confirming specific numerical changes ahead of the WEO release.

The preview comes against a backdrop of repeated forecast adjustments by the IMF over the past year. The fund raised its 2025 global growth forecast to 3.2 percent in October 2025 from an earlier midyear baseline of 3.0 percent, while keeping the 2026 projection at 3.1 percent. That chronology reflects incremental upward revisions through July and October as data outturns surprised on the upside in several major economies.

Markets and policymakers will be watching whether the Jan. 19 update lifts the 2026 projection as well. A modest upward revision could ease some concerns about a synchronized global slowdown, supporting risk assets and commodity prices. At the same time, Georgieva’s emphasis on downside risks serves as a reminder that upside surprises on near-term growth are not the same as durable, broad-based recoveries.

Geopolitical tensions and rapid technological change are the two risks Georgieva highlighted. She warned that rising strains between major trading partners could disrupt commerce and investment flows, amplifying uncertainty in already fragile supply chains. On technology, Georgieva flagged the large volumes of resources flowing into artificial intelligence and related ventures, warning that if those investments fail to deliver anticipated productivity gains they could create financial distress for investors and financial markets.

For policymakers, the twin message is familiar but pressing: guardrails for stability are needed even when headline growth looks healthy. Central banks must balance still-elevated inflation risks against signs of growth resilience; a sharper deterioration tied to trade disruptions or a misfiring AI investment cycle could force abrupt shifts in interest-rate expectations and safe-haven demand. Fiscal authorities may need to preserve buffers for countries vulnerable to external shocks, and multilaterally coordinated responses could be required if disruptions become severe.

Georgieva’s remarks in Kyiv also occurred amid ongoing discussions about IMF support for Ukraine, underlining how country-level lending priorities and global assessments can intersect at the fund. The WEO update on Jan. 19 will provide the first opportunity to compare any fresh numerical revisions with the October baseline and with the World Bank’s recent upward revision.

Analysts said the report will be judged not just on headline growth numbers but on how the IMF quantifies the risks from trade policy shifts and the financial implications of rapid technological change.