The global economy’s recent “unexpected resilience” is a great distortion, skewed by a massive pre-tariff buying spree, a new report has claimed. While this has led to an upgraded 2025 growth forecast of 3.2%, a leading financial body warns that the underlying health of the economy is weak and the outlook is “dim.”
The report explains that the announcement of US-led tariffs prompted households and companies to “bring forward consumption” to beat their introduction. This created a one-off, artificial surge in economic activity that has made the global economy appear stronger than it actually is.
The institution warns that now this distortion is fading, the true, negative impact of protectionism will become clear. It expects a gradual but steady decline in business investment as companies grapple with the long-term uncertainty, a process it compares to the slow economic drag seen in the UK after Brexit.
The UK’s own forecast reflects this complex reality. A modest growth upgrade to 1.3% for this year is a result of this distorted global picture. However, the country is also facing the G7’s highest inflation rate, a sign of more fundamental, long-term problems.
Beyond the tariff distortion, the report highlights other risks that threaten the “dim” outlook. These include the economic damage from restrictive immigration policies and the potential for a “correction” in “stretched” stock markets. The core message is that the true state of the global economy has been masked, and the reality may be much weaker than the current data suggests.