Global Economy

The year 2025 was recorded as a period when the fundamental rules shaping the global economy underwent a comprehensive transformation, and new paradigms in trade and fiscal policy were tested. Tariff increases implemented by the United States at the beginning of the year triggered a critical policy shift, signaling a strengthening of protectionism on a global scale. Although subsequent negotiations partially offset these effects, uncertainties regarding the direction of the global economic order remained on the agenda throughout the year.

Concurrent with these developments, some advanced economies made significant cuts to international development aid and adopted stricter immigration policies. This situation is creating downward pressure on labor supply and potential growth. On the other hand, the preference for more expansionary fiscal policies in many major economies, while supporting short-term economic activity, has raised concerns about public debt sustainability and cross-border effects. In this context, global institutions, financial markets, and policymakers are trying to adapt to a new environment shaped by a more fragmented global structure, weakening medium-term growth expectations, and the need to realign policy frameworks.

Growth and Inflation Outlook

The International Monetary Fund (IMF), in its April 2025 World Economic Outlook (WEO) Report, lowered its global growth forecast for 2025 to 2.8%. This revision is based on the assumption that tariff implementations will create supply-side shocks in the countries implementing these policies and demand-side shocks in the targeted economies, and that increased uncertainty will suppress global demand.

However, tariff reductions announced mid-year allowed for a limited upward revision of the growth forecast to 3.0% in the July update. While the global inflation outlook remained generally stable, inflationary pressures were observed to have increased in the U.S., while weakening in many other economies.

According to the World Economic Outlook Report published by the IMF in October, global growth is projected to slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. In advanced economies, growth is expected to be around 1.5% in the 2025–2026 period, while growth in the U.S. economy is projected to slow to around 2.0%. Emerging and developing economies are forecast to continue being the main drivers of global growth, with growth rates slightly above 4%.

While global inflation is expected to fall to 4.2% in 2025 and 3.7% in 2026, divergences among countries are expected to become more pronounced. While inflation in the U.S. is expected to remain above targets and upside risks are expected to persist, a more moderate outlook for price increases is emerging in the rest of the world.

Trade Volume and Risks

Global trade volume is projected to grow by an average of 2.9% in the 2025–2026 period, with the ongoing trend of trade fragmentation causing this growth rate to remain below historical averages. For the upcoming period, risks to the global economic outlook can be said to be predominantly on the downside.

In summary, prolonged policy uncertainty could adversely affect consumption and investment decisions, while additional protectionist measures, particularly non-tariff barriers, could disrupt supply chains and limit productivity growth. Labor supply shocks that may arise from tightening immigration policies could create additional pressures on growth in economies with aging populations and skills gaps. The combination of fiscal vulnerabilities and financial market sensitivities with rising borrowing costs could elevate risks related to public debt. Sharp price corrections in technology assets, should expectations in the field of artificial intelligence not be met, can be considered additional risks to macro-financial stability. In addition to all this, pressures on the independence of key economic institutions, particularly central banks, stand out as a significant risk factor that could weaken policy credibility.

Conversely, progress in trade negotiations and a reduction in uncertainty could support the medium-term growth outlook. Faster and more widespread productivity gains from artificial intelligence also have the potential to make significant contributions to global economic performance if supported by appropriate policy frameworks.

Future Outlook: Restoring Confidence

Restoring confidence on a global scale depends on taking predictable, consistent, and sustainable policy steps. Strengthening rule-based and transparent frameworks in trade policy will reduce uncertainty and encourage investment. While strengthening public finance buffers and maintaining debt sustainability remain priorities in fiscal policy, it is critically important that monetary policies are conducted within a balanced framework between price stability and growth risks, and that central bank independence is preserved. Structural reforms that increase labor mobility, encourage labor force participation, accelerate digital transformation, and strengthen institutional capacity will enhance resilience and support long-term growth potential in an increasingly fragmented global economic environment.

Restoring confidence on a global scale depends on taking predictable, consistent, and sustainable policy steps.