The Economics Show The economy in 2026: What risks lie ahead? With Gita Gopinath
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Jan 23, 2026 Gita Gopinath, former deputy managing director at the IMF and a Harvard economics professor, joins Martin Wolf to dissect the global economy's hidden complexities. They explore why stable growth numbers can be misleading and how AI investment is cushioning the impact of tariffs. Gita warns about the fragility of advanced economies facing high public debt and the looming threat of financial crises. The discussion also covers the future of the dollar and the potential risks posed by unregulated stablecoins and tight fiscal policies.
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Tariffs Look Bigger On Paper Than In Practice
- Tariffs' headline rates overstate what importers actually pay and so their immediate macro impact looks smaller than expected.
- AI investment and fiscal support have largely offset the drag from tariffs in 2025, sustaining growth.
Export Rerouting Is Temporary
- Many exporters rerouted shipments in 2025 to avoid US tariffs, but Gita Gopinath warns this rerouting is unlikely to be sustainable.
- Continued discriminatory tariffs will prompt retaliation and trade diversion that erodes global growth over time.
Investment Is Concentrated In AI
- Business investment in the US stalled outside AI-related projects, showing investment is highly concentrated.
- Sustained policy uncertainty and state intervention risk deterring broader long-term capital spending.