In this episode, we explore how global growth is projected to be 3.0% for 2025 and 3.1% in 2026, a slight uptick from previous forecasts. This upward revision is largely attributed to stronger-than-expected front-loading in anticipation of higher tariffs, lower average effective US tariff rates than initially announced, an improvement in financial conditions (including a weaker US dollar), and fiscal expansion in some major jurisdictions. However, the report cautions that this apparent resilience stems more from trade-related distortions than underlying economic robustness.

While global headline inflation is expected to gradually fall to 4.2% in 2025 and 3.6% in 2026, we'll discuss the notable cross-country differences, with inflation predicted to remain above target in the United States but more subdued in other large economies.

The outlook is not without its challenges. We'll unpack the downside risks, including the potential for a rebound in effective tariff rates leading to weaker growth, elevated uncertainty weighing more heavily on activity, escalating geopolitical tensions disrupting global supply chains and pushing up commodity prices, and larger fiscal deficits raising long-term interest rates and tightening global financial conditions. Conversely, we'll also look at the potential upsides, such as breakthroughs in trade negotiations establishing predictable frameworks and leading to a decline in tariffs.

Finally, we'll cover the IMF's crucial policy recommendations. These include:

• Promoting clear and transparent trade frameworks through pragmatic cooperation.

• Restoring fiscal space and ensuring sustainable public debt.

• Carefully calibrating monetary policies to country-specific circumstances to maintain price and financial stability.

• Implementing much-needed structural reforms to boost productivity and long-term growth.