IMF chief sees global GDP growth as ‘beautiful but not enough’ to handle ‘the debt that is hanging around our necks’

European Central Bank President Christine Lagarde, International Monetary Fund head Kristalina Georgieva and World Trade Organization head Ngozi Okonjo-Iweala said in a panel discussion on Friday that the global economy was showing unexpected resilience despite the hype. But while growth is holding up, problems such as alarming levels of government debt and inequality loom large.

That flexibility persists despite turmoil caused by US trade policy under President Donald Trump, who upset the week-long forum by threatening to impose tariffs on countries backing Greenland against a US takeover attempt, then withdrawing the tariff proposal.

What is needed now, they said, are efforts to boost growth to offset heavy debt levels around the world and ensure that disruptive technologies such as artificial intelligence do not exacerbate inequality or destroy labor markets. Europe must work to boost productivity and improve the business climate for investment.

Georgieva said that the International Monetary Fund’s recently raised forecast of global growth of 3.3% for this year was “beautiful, but not enough… Do not fall into complacency.”

She said the level of growth was not enough to reduce “the debt hanging around our necks” and that governments needed to take care of “those who fall off the wagon.”

“We have to look at plan B, or alternative plans,” Lagarde said. “I think we’ve seen a lot of noise this week… and we need to distinguish between the signal and the noise… and we should be talking about alternatives.”

She responded to the “Europe bashing” heard during the summit by saying: “We have to thank the critics” for stressing the need for Europe to improve the investment climate and encourage innovation.

Lagarde downplayed Canadian Prime Minister Mark Carney’s provocative speech at the forum, who described Trump’s approach as a “break” with an international order based on rules, trade and cooperation, and said the way of doing business “will not return.” “From an economic and business point of view, we depend on each other,” she said.

Okonji Oil noted that 72% of global trade still takes place under World Trade Organization rules, where countries agree to impose the same tariffs on all trading partners. This is despite the “biggest disruption in 80 years”.

“Flexibility is an integral part of the system, and that is starting to show,” she said. “I don’t think we’ll ever go back to where we were,” she admitted.

Georgieva offered a historical perspective: “We have always traded and we will always trade. Trade is like a river, water. You put an obstacle, you get around it. Yes, it will be different, but there will always be a need for Dr. Ngozi to take a look at global trade.”

Georgieva also admitted that things have changed forever: “How many of you have seen ‘The Wizard of Oz?’… We’re not in Kansas anymore.”