The latest global economic forecast comes with a significant catch. While the headline number is an upgraded 2025 growth forecast of 3.2%, the fine print of the report is filled with stark warnings, delayed-action threats, and a persistently “dim” outlook that undermines the optimistic figure.
The first catch is that the growth is “distorted.” The report states that the “unexpected resilience” is partly due to a rush of consumer and business spending to get ahead of tariffs. This is a one-time boost that doesn’t reflect underlying economic health and is now fading.
The second catch is the time lag on tariffs. The full, negative impact on business investment is still working its way through the system. The report uses the UK’s post-Brexit experience as its main exhibit, showing that it can take years for the full damage to become apparent.
The third catch is the UK’s inflation problem. While the UK’s growth was also upgraded (to 1.3%), the fine print reveals it’s on track for the G7’s highest inflation rate. This suggests the growth is not of a healthy, sustainable kind and presents a major policy headache.
The final catch involves new risks. The report flags the potential for a “correction” in “stretched” AI-driven stock markets and the economic harm from restrictive immigration policies. These are major headwinds not reflected in the positive headline number. In essence, the report gives with one hand and takes away with the other, with the warnings ultimately outweighing the upgrade.