IMF Warns of Growing Economic Instability Amid Global Turmoil
Washington D.C., Sunday, 12 October 2025.
The IMF cautions about rising global economic instability due to trade tensions, AI risks, and policy uncertainties, urging stakeholders to prepare for potential financial shocks and enhance resilience.
Global Economic Challenges Intensify
The International Monetary Fund (IMF) has heightened its warnings about the global economy’s precarious state, emphasizing the escalating challenges posed by trade tensions, artificial intelligence (AI) bubbles, and policy uncertainties. These concerns were articulated by IMF Managing Director Kristalina Georgieva, who categorically stated that ‘uncertainty is the new normal.’ This warning follows recent developments, including former President Donald Trump’s threats to impose additional tariffs on Chinese goods, which led to significant market disruptions [1][2].
Impact of Trade Tensions and AI Bubble Risks
The ongoing trade conflict, particularly between the United States and China, has been exacerbated by new tariff threats. On October 10, 2025, Trump announced potential punitive tariffs of 100% on Chinese imports, causing a marked decline in market stability the following day [1][3]. Meanwhile, the rapid growth of the AI sector has raised fears of an impending market correction, drawing parallels to the internet boom of the late 1990s. Experts, including Ben May of Oxford Economics, caution that the AI boom may obscure underlying weaknesses in other sectors of the U.S. economy [1][2].
Policy Uncertainties and Global Economic Meetings
As the global economic landscape becomes more volatile, the IMF has urged nations to bolster their economic resilience against potential shocks. In line with this, the annual meetings of the IMF and World Bank are set to take place in Washington, aiming to address these pressing concerns [1][2]. Additionally, the practice of ‘friendshoring’—trading with geopolitical allies—continues to reshape global trade dynamics, potentially circumventing the U.S.’s trade influence [1].
Outlook and Preparations for Future Challenges
Looking ahead, the IMF’s World Economic Outlook, which will be published next week, is expected to provide further insights into these challenges and the strategies that governments might adopt to stabilize their economies [2]. As these global economic conditions evolve, stakeholders are advised to remain vigilant and proactive in their policy responses to mitigate the risks associated with these uncertainties [2][4].