\n<\/p>\n
The head of the International Monetary Fund has issued a stark warning about the mounting risks facing the global economy, saying: \u201cBuckle up: uncertainty is the new normal.\u201d<\/p>\n
As finance ministers and central bankers prepare to meet in Washington for the IMF\u2019s annual meetings next week, its managing director, Kristalina Georgieva said the world economy had shown surprising resilience in the face of Donald Trump\u2019s trade war.<\/p>\n
The US is now expected to avoid recession, despite the imposition of historic tariffs on many of its trading partners, and the global economy is forecast to slow \u201conly slightly this year and next\u201d, she said.<\/p>\n
But Georgieva pointed to growing signs of strain, including the record gold price \u2013 which topped $4,000 an ounce on Wednesday, signalling anxiety among investors \u2013 and exceptionally high valuations for US stocks.<\/p>\n
\u201cBefore 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,\u201d she told an audience at the Milken Institute in Washington.<\/p>\n
Georgieva suggested the full economic impact of US tariffs \u201cis yet to unfold\u201d, after many firms front loaded exports earlier this year to dodge the levies. \u201cBuckle up: uncertainty is the new normal and it is here to stay,\u201d she warned.<\/p>\n
In the last update of its World Economic Outlook in July, the IMF forecast global GDP growth of 3% for this year \u2013 a modest slowdown from 3.3% in 2024. It will update its projections at next week\u2019s meetings.<\/p>\n
While financial markets have broadly remained calm in the face of policy turmoil, she said this was \u201cmasking but not arresting some softening trends\u201d, and warned: \u201cHistory tells us this sentiment can turn abruptly.\u201d<\/p>\n
Share prices in the US have surged to fresh highs in recent weeks, driven by rocketing valuations for the \u201cmagnificent seven\u201d tech firms, including chip maker Nvidia and Elon Musk\u2019s electric vehicle-maker Tesla.<\/p>\n
Optimism about future productivity gains from generative AI have continued to underpin confidence on Wall Street, despite signs of a slowdown elsewhere, including in the US jobs market.<\/p>\n
Drawing a parallel with the dotcom bubble at the turn of the millennium, Georgieva said; \u201cToday\u2019s valuations are heading toward levels we saw during the bullishness about the internet 25 years ago.<\/p>\n
\u201cIf a sharp correction were to occur, tighter financial conditions could drag down world growth, expose vulnerabilities, and make life especially tough for developing countries.\u201d<\/p>\n
skip past newsletter promotion<\/p>\n
Sign up to Business Today<\/span><\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: <\/strong>Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.<\/span><\/p>\n after newsletter promotion<\/p>\n The IMF is urging policymakers in large economies to take action to reduce the risks of instability by addressing global imbalances \u2013 including calling on the US to tackle its spiralling public sector deficit.<\/p>\n Trump\u2019s tax cuts, targeted at higher earners, are expected to add more than $3tn to US public debt over the next decade \u2013 though the US president has hailed tariff revenues as a way of improving the nation\u2019s finances.<\/p>\n Georgieva also called on Beijing to carry out reforms aimed at kickstarting growth and boosting household spending, saying that in China, \u201cprivate savings are chronically high\u201d.<\/p>\n The Bulgarian economist also offered what she called \u201ctough love\u201d, to \u201cmy beloved native Europe\u201d, urging the EU to appoint a \u201csingle market tsar\u201d, to accelerate the integration of markets.<\/p>\n \u201cEnough lofty rhetoric on how to lift competitiveness \u2013 you know what must be done. It is time for action,\u201d she said. \u201cRemove border frictions in the labour market, goods and services trade, energy and finance. Build a single European financial system. Build an energy union. Complete your project.\u201d<\/p>\n She also highlighted growing public frustration at the economic status quo in some countries, warning: \u201cMany people in many places \u2013 especially the young \u2013 are taking their disappointment to the streets: from Lima to Rabat, from Paris to Nairobi, and from Kathmandu to Jakarta, all are demanding better opportunity.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" The head of the International Monetary Fund has issued a stark warning about the mounting risks facing the global economy, saying: \u201cBuckle up: uncertainty is the new normal.\u201d As finance ministers and central bankers prepare to meet in Washington for the IMF\u2019s annual meetings next week, its managing director, Kristalina Georgieva said the world economy<\/p>\n","protected":false},"author":1,"featured_media":26741,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[689,1404,1051,1123,6654,531,16030,7379,3785,1060],"class_list":{"0":"post-26740","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-chief","9":"tag-economy","10":"tag-fund","11":"tag-global","12":"tag-imf","13":"tag-international","14":"tag-monetary","15":"tag-normal","16":"tag-uncertainty","17":"tag-warns"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/26740","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=26740"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/26740\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/26741"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26740"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26740"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26740"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}