Opportunity in a Time of Change
IMF News, October 8, 2025
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- Published: October 8, 2025
Overview
- Event: Curtain raiser speech for the 2025 Annual Meetings at the Milken Center.
- Speaker: Kristalina Georgieva, Managing Director, IMF.
- Date and time: October 8, 2025 at 10:00 a.m. ET.
- Tone: Assessment of global economic resilience amid deep transformations in geopolitics, technology, demographics, and climate; call for policies to expand opportunity, especially for youth.
Assessment of current global economic state
- Short summary: "Short answer: better than feared, but worse than we need."
- Global growth: "We see global growth slowing only slightly this year and next."
- Uncertainty: "Globally it has shot up and continues to climb. Buckle up: uncertainty is the new normal and it is here to stay."
- Resilience explained by four reasons:
- One, improved policy fundamentals.
- Two, private sector adaptability.
- Three, less severe tariff outcomes than initially feared—for now.
- Four, supportive financial conditions—for as long as they hold.
Four drivers of resilience — details
- Improved policy fundamentals and global coordination:
- Credible monetary policy, deeper local currency bond markets, new fiscal rules.
- "Swift, decisive, and globally coordinated fiscal action" during the pandemic limited scars.
- Emerging market economies "have significantly upgraded their policy frameworks and institutions."
- Private sector adaptability:
- Firms frontloading import orders, reorganizing supply chains.
- Corporate balance sheets "are generally strong after years of robust profits."
- "Artificial intelligence is becoming mainstream."
- Tariff developments:
- "The U.S. trade-weighted tariff rate has fallen from 23 percent in April to 17½ percent now—still much higher than before."
- "The U.S. effective rate is now far above the rest of the world’s, which has held relatively steady this year, with very few cases of retaliation."
- Caution: "The story is not over—U.S. tariff rates keep moving."
- Supportive financial conditions:
- "Global equity prices are surging."
- Tight risk spreads and earlier dollar slide have eased funding for non-U.S. borrowers.
Risks and warning signs
- Gold demand and reserves: "Holdings of monetary gold now exceed one-fifth of the world’s official reserves."
- Tariff spillovers: margin compression could shift to price passthrough, raising inflation and affecting monetary policy and growth; "a flood of goods previously destined for the U.S. market could trigger a second round of tariff hikes."
- Financial valuation risk: "Today’s valuations are heading toward levels we saw during the bullishness about the internet 25 years ago."
- If a sharp correction occurs: tighter financial conditions could "drag down world growth, expose vulnerabilities, and make life especially tough for developing countries."
- Labour and jobs: "Easy financial conditions—which are masking but not arresting some softening trends, including in job creation."
IMF’s three medium-term policy goals
- First: "to durably lift growth, so the economy can create more jobs, more public revenue, and better public and private debt sustainability;"
- Second: "to repair governments’ finances, so they can buffer new shocks and attend to pressing needs without driving up private sector borrowing rates;"
- Third: "to address excessive imbalances, both domestic and external, so they do not emerge as a spoiler."
Growth strategies and regional prescriptions
- Global medium-term growth baseline: "Global growth is forecast at roughly 3 percent over the medium term—down from 3.7 percent pre-pandemic."
- Drivers of change: "China decelerating steadily while India develops into a key growth engine."
- Policy priorities to lift private sector productivity: protect property rights, rule of law, good data, effective bankruptcy codes, strong financial sector oversight, independent yet accountable institutions.
- Call for regulatory reform: "embrace a regulatory housecleaning to release entrepreneurial energy, supported by strong institutions and governance."
- Asia:
- "Deepen internal trade to include more final goods and more services and press forward with reforms to strengthen the service sector and access to finance."
- "Our analysis suggests a push for more regional integration—notably by lowering nontariff barriers—could raise GDP by 1.8 percent in the long run."
- Sub-Saharan Africa:
- "Comprehensive business-friendly reforms, combined with progress in building the Continental Free Trade Area, could lift the real GDP per capita of the median African country by over 10 percent."
- Europe:
- Urges concrete action: appoint a "single market czar" with real authority; remove border frictions in labor, goods and services trade, energy, and finance; "Build a single European financial system. Build an energy union."
- Comparison: "seven U.S. mega-firms—none of which existed 51 years ago—boast market capitalization dwarfing that of firms of similar vintage in Europe."
Fiscal affairs and public debt
- Global public debt projection: "Global public debt is projected to exceed 100 percent of GDP by 2029, led by advanced and emerging market economies."
- Risks of rising debt: higher interest payments, upward pressure on borrowing costs, constrained spending, reduced ability to cushion shocks.
- Official development assistance: "advanced economies’ development assistance to the world’s neediest countries, which continues its regrettable decline."
- Low-income countries response: "more self-help—including setting a minimum tax-to-GDP target of 15 percent."
- Fiscal consolidation: "necessary in countries rich and poor alike"; consolidation can be delivered if "planned, communicated, and implemented well," aided by higher medium-term growth.
External imbalances and country-specific guidance
- Risks: imbalances can "trigger a protectionist backlash" and "fuel financial stability risks."
- U.S. recommendations:
- Address federal government deficit: "federal debt-to-GDP ratio is on a path to exceeding its all-time high after World War Two."
- "We need sustained action that goes beyond discretionary spending."
- Incentivize household saving; consider expanding plans that provide favorable tax treatment for retirement saving, among other tax policy adjustments.
- China recommendations:
- Address chronically high private savings, protracted real estate adjustment, and deflationary pressures with "transitional fiscal expansion and permanent fiscal recomposition."
- Package to boost private consumption, transition growth model, and reflate the economy.
- Suggested components: "more spending on social safety nets and property sector clean-up, and much less on industrial policy—where a new IMF paper estimates the costs at a very high 4.4 percent of GDP per year."
- Germany:
- Recent shift to more expansive fiscal policy "should help bring down the current account surplus."
- Public infrastructure spending can "improve incentives for private investment at home" and inject dynamism into the private sector.
Closing call and priorities
- Institutional duty: influence policy to "maximize economic opportunity for all people," with special emphasis on youth aspirations.
- Policy package: "free markets with smart regulations, strong institutions, reliable data and robust safety nets—policies with the power to further increase resilience and accelerate growth."
- Inspirational close: quote from the room—“A dream you dream alone is only a dream. A dream you dream together is reality.”
Kristalina Georgieva, Managing Director, IMF — October 8, 2025. As prepared for delivery.