Dubai: International Monetary Fund managing director Kristalina Georgieva said concerns that aggressive tariff announcements, particularly by the US, would trigger inflation and disrupt global trade flows have so far proved overstated. Her comment comes after India and the US said they have agreed on a trade deal and Washington cut tariffs on India.
While headline tariff rates initially appeared steep, actual duties collected were significantly lower after negotiations and adjustments, Georgieva said.
Also read: IMF chief says global inflation to fall to 3.8%, trade integration is needed
"Trade is like water. You put an obstacle, it goes around it," Georgieva said at the World Governments Summit 2026, noting that effective tariff levels had fallen from around 23% initially to closer to 9% in actuals after negotiations and agreements.
Global trade has adapted through new bilateral and plurilateral agreements, as most countries remain dependent on an integrated global economy, she said.
Announcement on the India-US deal comes shortly after India and the European Union signed a free trade agreement, dubbed 'mother of all deals', after 20 years of negotiations. India recently has also signed free trade deals with New Zealand, Oman and the UK.
Georgieva said the global economy has proved more resilient than expected despite trade disruptions, tariff uncertainty and rising geopolitical tensions. "We see a world that is more diverse, more multipolar and more resilient as a result," she said. "Geopolitically, it is much more complex with technological, political, geopolitical and demographic transformation, but on the other side it is quite resilient."Also read: IMF's growth forecasts to show resilience to global trade shocks, Georgieva says
She added that the IMF had upgraded its global growth projections for this year and next, as fears of a sharp slowdown triggered by trade tensions had not materialised. "We upgraded these projections because, one, the private sector everywhere is agile and adaptable. Two, the trade shocks that we thought may come are muted. Three, incredible enthusiasm about the potential of AI productivity," said the IMF MD.
In its January 2026 World Economic Outlook update, the IMF upgraded its global growth forecast to 3.3% for 2026, a 0.2-percentage-point increase from the October 2025 forecast. The fund raised its estimate of India's GDP growth in the current 2025-26 financial year to 7.3% from its earlier prediction of 6.6%.
Georgieva warned that heightened uncertainty and frequent external shocks were likely to persist, underscoring the need for strong domestic institutions and prudent economic management.
While headline tariff rates initially appeared steep, actual duties collected were significantly lower after negotiations and adjustments, Georgieva said.
Also read: IMF chief says global inflation to fall to 3.8%, trade integration is needed
"Trade is like water. You put an obstacle, it goes around it," Georgieva said at the World Governments Summit 2026, noting that effective tariff levels had fallen from around 23% initially to closer to 9% in actuals after negotiations and agreements.
Global trade has adapted through new bilateral and plurilateral agreements, as most countries remain dependent on an integrated global economy, she said.
Announcement on the India-US deal comes shortly after India and the European Union signed a free trade agreement, dubbed 'mother of all deals', after 20 years of negotiations. India recently has also signed free trade deals with New Zealand, Oman and the UK.
Georgieva said the global economy has proved more resilient than expected despite trade disruptions, tariff uncertainty and rising geopolitical tensions. "We see a world that is more diverse, more multipolar and more resilient as a result," she said. "Geopolitically, it is much more complex with technological, political, geopolitical and demographic transformation, but on the other side it is quite resilient."Also read: IMF's growth forecasts to show resilience to global trade shocks, Georgieva says
She added that the IMF had upgraded its global growth projections for this year and next, as fears of a sharp slowdown triggered by trade tensions had not materialised. "We upgraded these projections because, one, the private sector everywhere is agile and adaptable. Two, the trade shocks that we thought may come are muted. Three, incredible enthusiasm about the potential of AI productivity," said the IMF MD.
In its January 2026 World Economic Outlook update, the IMF upgraded its global growth forecast to 3.3% for 2026, a 0.2-percentage-point increase from the October 2025 forecast. The fund raised its estimate of India's GDP growth in the current 2025-26 financial year to 7.3% from its earlier prediction of 6.6%.
Georgieva warned that heightened uncertainty and frequent external shocks were likely to persist, underscoring the need for strong domestic institutions and prudent economic management.
