Anxiety and Optimism: A Pulse-Check of the IMF-World Bank Meetings

Rebecca Patterson is a senior fellow at the Council on Foreign Relations, a globally recognized investor, and macroeconomic researcher.

The twice-yearly pilgrimage of public and private-sector leaders for regular International Monetary Fund (IMF) and World Bank meetings is a useful way to take the pulse of the global economy, as well as how decision-makers are shaping its future.

Over just a few days of admittedly back-to-back meetings in Washington, D.C, last week, economists, investors, and policymakers gained a sense of how consensus views are changing, what issues are keeping officials awake at night, and what they are focused on going forward.

At this October’s gathering, the mood continued to be anxious, though reassured—maybe even happily surprised by the global economic resilience to date. The IMF slightly revised its 2025 global gross domestic product (GDP) growth target to 3.2 percent from the 2.8 percent forecast issued in April when U.S. tariffs were initially unveiled.

A reason for optimism

Some of the “better than feared” outcome was tied to the tariffs having a more moderate effect than expected. A number of factors contributed to this outcome: tariff implementation delays and granted exemptions, transshipments of goods through lower-tariff countries, companies feeling pressure to not pass on higher costs to consumers, among others.

Another key growth support frequently discussed during the week was artificial intelligence (AI), broadly defined. Investment by AI-related companies boosted U.S. GDP through both enormous capital expenditures as well as consumer wealth generated by large, related equity price gains. Countries supplying key components for this technological trend, especially in Asia, also saw support for their respective economies over the last several months.

In addition, the weaker U.S. dollar was mentioned in some conversations as an indirect help for select emerging economies. By helping strengthen the local currencies, which in turn limited inflation, emerging central banks had more room to ease monetary policy and support growth.

In China’s case, economic support came not just from monetary but also fiscal easing. Stronger local currencies and stimulative policy helped a number of emerging equity and bond markets outperform U.S. peers over the first three quarters of 2025, something definitely not expected earlier in the year.

Disputes, risks, and politicization concerns

In terms of growth risks, trade and AI were also seen from a “glass half empty” perspective. A recent escalation in U.S.-China trade tensions ahead of a potential meeting of the countries’ leaders reminded the Washington attendees that trade uncertainty is likely to be sustained at the margin, leaving companies more cautious. There was broad consensus that even if the United States’ global reciprocal tariffs are ruled unconstitutional by the Supreme Court, they will be replaced to a degree by other types of tariffs or tariff-related measures, such as export controls.

In terms of AI, the potential for large U.S. tech firms to struggle to keep surpassing analyst expectations, potentially leading to an equity-market selloff, was a focal point. There was also a lively debate—though no agreement—about AI-fueled productivity. There were disputes over how quickly it would emerge, to what degree it would boost productivity growth for the economy, and how it would square with labor-market shifts.

Separately, conversations about growth prospects frequently included discussions of the Federal Reserve. These discussions were not just about how the central bank would thread the needle between a softening labor market and inflation stubbornly above the its 2 percent target, but also whether it would remain independent of politics and be able to support growth into 2026.

There was a bias in conversations that the Fed may not cut interest rates as much as financial markets now discount (nearly 125 basis points of cuts to the Fed funds rate by September 2026 are expected). This was a particular worry for those who believed that President Donald Trump’s trademark policies on trade and immigration could bring new economic pressures. Many expressed concern that tariffs will continue to feed through into core goods prices into 2026 and that a sharp fall in immigrant labor supply could boost wage inflation in certain industries.

There was wariness about political pressures threatening the Fed’s independence but also a sense that a truly politicized central bank remained a way off. The Trump administration would need to get a majority of the voters on the Federal Open Market Committee, the primary body within the Fed, aligned with the White House’s political priorities. This is possible but not easily achieved in the near term.

That said, there were concerns voiced about what has been perceived as politicization of White House economic policy, including the recent decision by the U.S. Treasury to use its Exchange Stabilization Fund to support the Argentine peso ahead of the country’s legislative elections at the end of the month.

Multilateral institutions focused on managing stakeholders

The week brought several opportunities to hear from leaders at the IMF and World Bank and from governments and corporations interacting with these institutions. At least two themes stood out.

Public-private partnerships. World Bank President Ajay Banga highlighted how he is trying to increase the organization’s efficiency. His goals include increasing the bank’s effect on developing and low-income economies and developing better partnerships with private sector firms as they seek to finance global development. Banga highlighted a $510 million collateralized loan obligation (CLO) issued this fall as an important step in attracting more private capital, in an institutional investor-friendly format, to support emerging markets. He said the bank’s goal is to have a standardized, regular pipeline of securities that investors can rely on.

A stand on surveillance broadly—and China specifically. For years, the IMF has published reports analyzing countries’ policy and macro-fundamental strengths and weaknesses, including suggested remedies for imbalances. U.S. Treasury Secretary Scott Bessent pushed the IMF to go further by strengthening surveillance of trade and manufacturing imbalances in countries like China. He further argued that the IMF should take a harder line on debt restructuring and countries that should reduce their reliance on IMF support.  

Looking ahead: the dollar, digital assets and the G20

While worries of an exodus from U.S. financial markets and the dollar were muted this month compared with the last IMF and World Bank meeting in April, there was still a lot of deliberation about the future of the dollar’s global dominance.

Attendees sanguine about the dollar pointed to an expected increase in dollar-based stablecoin demand, and the lack of reform in Europe that they believe is needed to attract greater capital to that region and its currency. (Interestingly, European Central Bank officials, preparing to launch a digital euro or central bank digital currency over the next few years, have in recent weeks voiced worries that a more widely used dollar stablecoin could undermine the euro.) They contrasted Europe's fragmented markets and bureaucratic decision-making process with the United States’ innovative economy and companies that attract overseas capital via financial markets and foreign direct investment.

Those taking a more cautious longer-term stand on the dollar highlighted governments abroad, central bank, and corporate steps to marginally reduce their reliance on the U.S. economy and markets. While hedging of dollar exposures appears to have slowed of late, several attendees said they expect more dollar diversification in the year ahead, moving to other currencies and—in the case of some central banks—gold. (The move toward gold was underscored in a recent survey of seventy-five central banks by the Official Monetary and Financial Institutions Forum, an economic think tank.) Progress in talks for new trade arrangements that do not include the United States—such as the European Union (EU) and India and the EU and Indonesia—were also highlighted as examples of such U.S. “de-risking.”

Currencies seem likely to be a topic of conversation at the 2026 Group of 20 (G20) meeting, tentatively scheduled to be held at President Trump’s Doral (Miami) golf club in December next year. The G20 was created in 1999 as a forum to gather developed and larger emerging economy leaders together to discuss and ideally coordinate policy around critical global economic and financial issues. It became a critical body in the wake of the 2008 financial crisis but in recent years has been challenged to reach consensus—it has not issued a communiqué since 2023.

What stood out in conversations with those attending the latest Washington meetings was the renewed interest in the G20 forum in general, and the United States’ role next year in particular. Attendees in Washington seem eager to work with the White House to shape the agenda.

This work represents the views and opinions solely of the author. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and takes no institutional positions on matters of policy.