Global economic leaders gathered at the World Economic Forum in Davos said Friday that the world economy is showing unexpected resilience despite tensions from the Trump administration’s trade policies. The International Monetary Fund raised its growth forecast to 3.3 percent for 2026, though leading policymakers warned the growth is insufficient to address mounting challenges.
The resilience underscores a complex picture: while global growth is holding up against trade disruptions, leaders said persistent government debt and the risk that artificial intelligence will worsen inequality pose stubborn obstacles that require coordinated international action.
The Leaders’ Assessment
Leading global economic policymakers convened at the World Economic Forum’s annual Davos summit and urged countries and businesses to look past the week’s trade-policy disruptions and focus on sustained economic growth and reduced inequality.
Christine Lagarde, head of the European Central Bank, Kristalina Georgieva, managing director of the International Monetary Fund, and Ngozi Okonkwo-Iweala, director-general of the World Trade Organization, outlined their view of a global economy that, despite near-term turbulence, remains fundamentally functional. “We have to look at Plan B, or Plans B,” Lagarde said Friday. “I think we’ve had a lot of noise this week and we need to distinguish the signal from the noise.”
The disruptions Davos witnessed included Trump administration threats to impose tariffs on countries supporting Greenland against a prospective U.S. takeover. The administration withdrew the tariff proposal after the market reaction.
The Growth Picture
Georgieva said the IMF’s recently raised forecast of 3.3 percent global growth for 2026 was “beautiful but not enough.” She cautioned that the growth rate would not be sufficient to reduce the global debt burden that continues to encumber economies worldwide.
The three officials pointed to evidence that global trade flows remain intact despite the month’s upheaval. Okonkwo-Iweala noted that 72 percent of global trade still operates under World Trade Organization rules, where countries agree to charge all trading partners the same tariffs. “The biggest disruption in 80 years has taken place,” she said, “yet resiliency is built into the system, and that is showing up.”
Challenges Ahead
The officials pointed to several persistent obstacles that demand coordinated action. Heavy government debt levels around the world require growth efforts to offset their weight. The rapid development of artificial intelligence poses risks of worsening inequality and disrupting labor markets unless policymakers intervene.
Europe specifically requires attention, the officials said. The region needs to boost productivity and improve its business climate for investment to remain competitive.
Lagarde responded to criticism of Europe voiced during the summit, including from Canadian Prime Minister Mark Carney, who called Trump’s trade approach a “rupture” with the international order based on rules and cooperation. “Europe should say thank you to the bashers,” Lagarde said, “for highlighting the need for improvement.”
Georgieva offered historical perspective. “We have always traded and we will always trade,” she said. “Trade is like a river, water. You put obstacle, it goes around it.”