Global Economic Growth Slows as Risks Mount
Washington, D.C., Wednesday, 29 October 2025.
The latest World Economic Outlook highlights a slowdown in global growth, emphasizing the need for strong policy frameworks to address downside risks and support sustainable economic strategies.
Economic Slowdown and Policy Recommendations
According to the latest World Economic Outlook released by the International Monetary Fund (IMF) in October 2025, global economic growth is projected to slow from 3.3% in 2024 to 3.2% in 2025, with further deceleration to 3.1% expected in 2026. Advanced economies are anticipated to grow at approximately 1.5%, while emerging markets and developing economies are projected to expand at just above 4% [1]. This deceleration highlights the urgency for policymakers to implement robust and credible policy frameworks to mitigate downside risks and enhance economic resilience [1].
Sector-Specific Challenges and Industrial Policy
The report underscores the potential of industrial policy to drive productivity in specific sectors. However, it cautions that such policies require precise targeting to avoid inefficiencies and substantial fiscal costs [1]. Policymakers are urged to focus on rebuilding fiscal buffers, preserving central bank independence, and implementing structural reforms to bolster economic stability [1]. These strategies are essential for navigating the dynamic and often turbulent global economic landscape.
Regional Variations in Economic Performance
The Regional Economic Outlook for Asia and the Pacific, also published in October 2025, reveals that economies in this region have demonstrated resilience despite external pressures, such as increased US tariffs [2]. Stronger-than-expected growth in the first half of 2025 underscores the importance of regional integration and structural reforms in sustaining economic momentum [2]. Nonetheless, the report warns of potential threats from reduced external demand and rising social tensions [2].
Financial Stability Concerns
The Global Financial Stability Report, also from October 2025, highlights elevated financial stability risks due to stretched asset valuations and pressures in sovereign bond markets [3]. Nonbank financial institutions (NBFIs) are playing an increasingly prominent role, raising concerns about financial market complexity and potential stress [3]. The report advises policymakers to enhance surveillance, ensure adequate buffers at financial institutions, and strengthen global financial safety nets to mitigate these risks [3].