Key Points
- IMF Managing Director Kristalina Georgieva said the Greenland dispute could hurt global growth.
- She urged both sides to “find a path to agreement.”
- President Trump has threatened a 10% tariff on eight European countries over the issue. The EU is considering retaliatory tariffs.
- The IMF has raised its global growth forecast but warned of risks from trade and geopolitical tensions.
The head of the International Monetary Fund, Kristalina Georgieva, said on Monday that it’s too early to know the full economic impact of the escalating tensions over Greenland. Still, she warned that it could be a major “headwind for growth.”
Speaking at the World Economic Forum in Davos, Georgieva said the IMF has run “all kinds of simulations” of what might happen if the trade dispute worsens. “What we do see in these simulations is that we deviate from keeping trade more or less on the right track, which could hold growth down,” she said.
Her comments came just two days after President Trump threatened to slap a 10% tariff on imports from eight European countries if no deal is reached for the U.S. to purchase Greenland.” The European Union is already in talks to hit back with its own retaliatory tariffs.
“The best way forward: Find a path to agreement, and that is going to be good for everybody everywhere,” Georgieva said.
Ironically, the IMF raised its outlook for global growth on Monday. However, it also warned that an artificial intelligence bubble and ongoing trade and geopolitical tensions are major risks to that forecast.
The standoff over Greenland is a perfect example of the kind of unpredictable event that could quickly derail the global economy.
