Weekly Market Summary

Article summaries

1. 1

   IMF lifts growth outlook on more benign tariffs as revived US-China trade war looms

   The International Monetary Fund (IMF) has raised its 2025 global GDP growth forecast to 3.2%, citing that recent tariff impacts have been less severe than expected and that financial conditions are improving. Factors helping growth include more moderate tariffs, stronger private-sector agility, a softer U.S. dollar, fiscal stimulus in China and Europe, and rising AI investment.

   However, there’s a significant risk: renewed U.S.–China trade tensions — including threats of 100% tariffs — could derail this positive outlook. The IMF warns that a full escalation could shave as much as 1.2 percentage points from growth in 2026, and even more by 2027.

2. 2

   Geopolitics worries banks more than inflation, survey finds

   According to a survey reported by the World Economic Forum, geopolitical risks have overtaken inflation as the top concern for central banks and sovereign wealth funds. Specifically, 83% of respondents see geopolitical tensions as the main risk to global economic growth in the coming year higher than those flagging inflation or monetary tightening.

   Looking further ahead, 86% expect growing geopolitical fragmentation and protectionism to be the biggest long-term threat. As a result, many institutions are diversifying reserves and adjusting strategies to manage this heightened political uncertainty.

3. 3

   Turbulent times: geopolitical risk and its impact on euro area financial stability

   This special feature from the European Central Bank (ECB) explores how geopolitical risk —from war, sanctions, and trade fragmentation can threaten financial stability in the euro area. The authors argue that while geopolitical events alone may not trigger a full-blown systemic crisis, they can act as catalysts when combined with existing financial vulnerabilities. Key channels of risk include higher funding costs, stressed non-bank institutions, and adverse feedback loops between markets and the real economy. The report recommends that financial institutions diversify and strengthen risk management, while policymakers monitor geopolitical shifts closely.