Growth on Divergent Paths Amid Elevated Policy Uncertainty

The global economy is projected to grow at a modest 3.3 percent in both 2025 and 2026, marking a decline from the historical average of 3.7 percent between 2000 and 2019. This revised forecast comes after an upward revision in US growth was offset by downward revisions in other major economies.

According to the World Economic Outlook (WEO), global headline inflation is expected to fall to 4.2 percent in 2025 and then decline further to 3.5 percent in 2026. Notably, advanced economies are on track to meet their inflation targets earlier than emerging market and developing economies.

However, the outlook remains uncertain due to divergent risks. While US growth could experience a boost thanks to elevated policy uncertainty, other countries face challenges. An elevated level of policy uncertainty poses significant risks, potentially straining the global economy's recovery trajectory.

"Policymakers must remain vigilant in navigating these challenges," said [Name], lead author of the WEO. "Weighing trade-offs between inflation and real economic activity will be crucial in maintaining fiscal sustainability and financial stability."

To achieve this balance, policymakers will need to employ a range of strategies. These include strengthening structural reforms, bolstering multilateral cooperation, and creating more robust buffers against future disruptions.

The global economy is set for a journey of gradual growth in the coming years, with divergent paths expected to persist. As policymakers navigate the uncertain economic landscape, these efforts will be critical in fostering stability and prosperity worldwide.

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