Global Economy and Trade

At the World Economic Forum in Davos on Jan. 23, European Central Bank President Christine Lagarde, IMF chief Kristalina Georgieva and WTO Director‑General Ngozi Okonjo‑Iweala said the world economy is proving more resilient than expected even as President Trump’s tariff threats and Greenland‑related trade clashes unsettle markets. Georgieva noted the IMF has lifted its 2026 global growth forecast to 3.3% but warned that is "beautiful but not enough" to work off record public debts or protect those "falling off the wagon." Lagarde urged governments and firms to "distinguish the signal from the noise," treating the week’s Europe‑bashing and tariff brinkmanship as motivation to improve productivity and the investment climate rather than to retreat from integration. Okonjo‑Iweala emphasized that about 72% of world trade still moves under WTO rules despite what she called "the biggest disruption in 80 years," arguing trade will adapt around political obstacles much like a river flows around rocks. Their message, delivered as Trump’s Greenland threats and tariff feints draw sharp criticism online and from allied leaders, is that structural problems like high debt, weak European productivity and AI‑driven inequality are bigger long‑run risks than any single U.S. tariff volley.

At Davos, Trump blasted the UK–Mauritius plan to transfer sovereignty over the Chagos Islands as an “act of great stupidity,” warning it would imperil the U.S. base on Diego Garcia despite London’s plan to retain the facility under a 99‑year lease, and analysts say he is tying opposition to the handover into a broader “Trump Doctrine” that bolsters his push for control of strategic Arctic territory. He has linked that Arctic push to coercive measures — threatening tariffs on European allies over Greenland before saying he would not impose them after a reported “framework” was reached in talks with NATO secretary‑general Mark Rutte and naming negotiators — a move that sparked a market rally even as Danish officials, Arctic experts and historical records dispute his claims about Greenland’s sovereignty and foreign naval activity.