The global economy is experiencing a form of whiplash, with a surprise upgrade to this year’s growth forecast immediately followed by stark warnings of a “dim” future. A leading financial institution has lifted its 2025 global growth projection to 3.2% but insists that this “apparent resilience” is a fleeting and deceptive phenomenon.
The report argues that the economic data has been skewed by “wild swings in trade policies.” The anticipation of US tariffs led many to bring forward consumption, creating a temporary surge that does not reflect sustainable growth. The real, damaging impact on investment is expected to follow a considerable lag, similar to what was observed in the UK after its EU exit.
The UK itself is on this rollercoaster. Its growth forecast for this year is now a slightly healthier 1.3%. Yet, it is also on track to suffer the highest inflation rate among its G7 peers in 2025 and 2026. This has prompted specific advice for the Bank of England to maintain a cautious and steady hand on monetary policy.
The report also looks beyond trade, highlighting the significant economic risks posed by restrictive immigration policies and overheated financial markets. The US is warned its immigration stance could directly harm its GDP, while the entire global economy is vulnerable to a “correction” in “stretched” stock markets if the current AI-fueled optimism fades.
In essence, the message is that the global economy is navigating a period of extreme uncertainty. The upgrade to the 2025 forecast is a welcome but potentially misleading data point in a much larger, more troubling narrative about the health of the world economy.