EDITORIAL: IMF Managing Director Kristalina Georgieva’s assertion that the global economy has displayed noteworthy resilience in the face of extraordinary adversity in recent years offers a rare note of optimism in an otherwise turbulent world.
Despite successive shocks — from the Covid-19 pandemic and more recent upheavals in the form of the wars in Ukraine and Gaza, with their broader regional repercussions, to the fallout of President Donald Trump’s protectionist trade agenda marked by the imposition of heavy tariffs on America’s trading partners — the world economy has nevertheless managed to stay afloat.
Add to this the tightening of immigration policies across several advanced economies — especially in the US — which has strained labour markets, and the disruptive yet transformative rise of artificial intelligence, reshaping industries and employment patterns, and it becomes evident that the world has been navigating uncharted waters.
Even so, the latest data shows that while growth has slowed, the downturn has been less severe than anticipated — a sign perhaps less of strength than of the world economy learning, uneasily, to live with instability. Reflecting this measured resilience, the IMF in July had raised its global growth forecast by 0.2 percentage points to three percent for 2025, and by 0.1 percentage point to 3.1 percent for 2026, with future projections also expected to show growth hovering near that level over the medium term.
The IMF managing director has attributed this guarded stability to a mix of “improved policy fundamentals”, the private sector’s adaptability to repeated shocks and the restraint shown by major economies in avoiding a descent into retaliatory tariff measures after the Trump Administration’s imposition of punitive tariffs. The US, for its part, softened its initial hardline posturing by cutting tariffs for several trading partners, bringing the average rate down from 23 percent in April to 17.5 percent at present.
What is worrying, however, is that this tentative calm shows no signs of translating into more durable, broad-based growth, as underlying vulnerabilities continue to cloud the world’s economic prospects. As Georgieva cautioned, the full impact of American tariffs “is still to unfold”, while geopolitical strains, entrenched patterns of inequality, deep-seated social unrest and economic insecurity in many parts of the world continue to loom large. Taken together, these pressures suggest the true resilience of the global economy is yet to be “fully tested”.
Some of these risks have already begun to crystallise with the Trump Administration’s latest tariff round – an additional 100 percent levy on Chinese exports to the US, alongside new export controls on high-value software taking effect on November 1.
As expected, the move has rattled financial markets and unsettled companies dependent on China’s processed rare earths and magnets. This brings into sharp focus the increasingly disruptive role that Washington has played since early 2025. Far from acting as a global leader focused on fostering stability and cooperation, its tariff offensives risk deepening volatility and eroding confidence in the global economic order. Its policies appear increasingly driven by short-term political calculations rather than long-term economic stewardship.
With major powers contributing more to global instability than to recovery, the path to stronger, more inclusive growth remains complicated. What is needed is renewed cooperation and undertaking of overdue structural reforms. Economies must rebuild fiscal space, address trade distortions and pursue policies that sustainably raise productivity.
As Georgieva has pointed out, regional priorities may differ: from improving internal trade and financial integration in Asia, to advancing business-friendly reforms and the continental free trade agenda in Africa, to rekindling dynamism in Europe through a more competitive and integrated single market. The underlying challenge, however, is shared: overcoming institutional inertia and short-termism towards policies that restore stability, innovation and long-term growth.
Copyright Business Recorder, 2025