“Whipsawing Growth Forecasts”: Report Cites Policy Swings for Economic Uncertainty

The global economic outlook is being muddied by “whipsawing growth forecasts” resulting from “wild swings in trade policies,” according to a new report from a top financial institution. While the immediate forecast for global growth has been upgraded to 3.2%, the underlying message is one of profound uncertainty and “dim prospects.”
The report suggests that the global economy’s “apparent resilience” is misleading. It argues that economic data has been distorted by businesses and households trying to get ahead of unpredictable policy shifts, such as the implementation of US tariffs. This has created short-term boosts in activity that do not reflect the true health of the economy.
The institution warns that the full, negative impact of these policies on business investment is still to come. It uses the UK’s post-Brexit economic trajectory as an example of how significant policy uncertainty can take a long time to translate into lower investment, suggesting a similar lag effect is currently at play on a global scale.
The United Kingdom itself is facing a mixed but challenging forecast. A modest upgrade to 1.3% growth this year is tempered by the alarming projection that it will have the G7’s highest inflation rate in 2025. This persistent inflation has led to calls for the Bank of England to remain cautious and not rush to cut interest rates.
Beyond the chaos of trade policy, the report highlights other major risks. These include the potential for restrictive immigration policies to stifle growth and fuel inflation, particularly in the US, and the danger of a sharp “correction” in “stretched” stock markets if investor sentiment, especially around AI, were to turn.