ecopulse 
The International Monetary Fund’s October 2025 World Economic Outlook (WEO) and the October 2025 Fiscal Monitor paint a picture of a global economy that remains resilient in the near term but faces meaningful medium-term risks. Global growth is modest and uneven, public debt trends are troubling, and geopolitical and climate-related risks are major sources of downside uncertainty.
Key findings
1. Growth projections: The IMF projects global real GDP growth at 3.2% for 2025 and 3.1% for 2026, slightly revised from earlier forecasts. Advanced economies are expected to expand more slowly than emerging markets and developing economies, which remain just above 4% growth.
2. Public debt trajectory: The October 2025 Fiscal Monitor warns that global government debt is on course to exceed 100% of global GDP by 2029 — the highest ratio since 1948 — driven by rising spending needs, legacy pandemic borrowing, and pressures from climate and defense spending.
3. Short-term resilience, medium-term fragility: The IMF notes that growth has been more resilient than some earlier forecasts predicted, helped in part by more benign tariff developments so far; nevertheless, medium-term prospects are weaker and risks remain skewed to the downside.
4. Regional divergences: The WEO’s country-level revisions include notable upgrades and downgrades — for example, Nigeria’s growth forecast was upgraded for 2025 and 2026 — while many low-income countries continue to face elevated fiscal stress and debt vulnerabilities.
Drivers of the current outlook
• Trade and geopolitics: Renewed tensions between major trading partners — especially US-China trade frictions — are a principal risk to global trade, investment and supply chains. • Inflation and monetary policy: While headline inflation has eased in some regions, the potential for renewed inflationary pressure could force central banks to delay rate cuts or resume tightening. • Fiscal pressures: Aging populations, climate adaptation and disaster costs, and strategic spending are increasing the demand for public resources. • Financial vulnerabilities: High debt levels, nonbank financial sector risks, and stretched asset valuations could amplify shocks.
Implications for markets and policymakers
For policymakers: the IMF emphasizes the need for credible fiscal plans that prioritize growth-enhancing public investment while restoring debt sustainability. Structural reforms to lift productivity, targeted social spending, and stronger debt-restructuring frameworks for vulnerable countries are recommended.
For markets: investors should price in policy uncertainty, elevated tail risks from geopolitics and climate events, and heterogeneity across countries — safe-haven assets may regain demand during risk-off episodes while opportunities remain in select emerging markets with strong fundamentals.
