WORLD ECONOMY AT CRITICAL JUNCTURE AND POLICY SHIFTS

WORLD ECONOMIC OUTLOOK 

According to IMF's World Economic Outlook April 2025 the earlier landscape of Global Economy has changed accordingly Governments around the world changed policy priorities and uncertainties reached a new peaks. Escalating  trade tensions and financial markets adjustments are swiftly changing policy uncertainties that has impacted Governments to reorder policy priorities. Measures of USA and countermeasure adopted  by its trading  partners have been ending up In a near fiasco.Swift escalation of trade tensions and  high levels of policy uncertainty are expected to impact global economic activity. Hence IMF has projected to drop global growth to 2.8% in 2025 from the earlier forecast of 3.0% for both years 2025 and 2026.Growth forecast for advanced economies is projected to be 1.4 in 2025and 1.5 in 2026 .However projections for USA slightly better with 1.8 for 2025 and 1.7 for 2026 as against only 0.8 and  1.2 for Euro area respectively for 2025 and 2026.Germany's projections are further down 0.0 in 2025 and 0.9 in 2026 as against France with 0.6 in projections  and 1.0 in 2026.Japan's projections were at 0.6 for both 2025 and 2026.UK is expected to perform slightly better with 1.1 and 1.4 respectively. Canada is also projected to do better with 1.4 in 2025 and 1.6 in 2026.As expected interestingly Emerging Markets and developing economies collectively  achieved 4.3 % growth in 2024 and further is  projected to grow 3.7 in 2025 and marginally Increase to 3.9 in 2026.Among them emerging and developing Asia which achieved high growth of 5.3 in 2024 is projected to grow 4.5 in 2025 and 4.6 in2026.While China's  growth achieved  was 5.0 in 2024 futher projections were  4.0  for both years 2025 and 2026.On the contrary India achieved 6.5% growth in 2024 which is projectedc to grow to 6.2 in 2025 and 6.3 in 2025 .Unlike that of in Asia Emerging  and developing Europe performance was not encouraging with 3.4 growth in 2024  and just 2.1 projected for both 2025 and 2026 .

In nutshell global growth is projected to decline despite upward revisions already expected in few  countries. While global headline inflation is expected to decline, shifting policies lead to abrupt tightening of  global financial conditions and international development assistance as well.It has been observed that escalating trade tensions and elevated policy induced uncertainty may further hinder economic growth and progress.Even policy shifts could lead sudden tightening of global financial conditions and capital flows.Demographic shifts taking place in different parts of the world can also threaten fiscal sustainability particularly because of ageing and consequent threat to the work participation .Ageing  poses challenges suh as low growth and increased fiscal pressures like high cost of geriatric care utilized .Boosting  infrastructure development, investment and following appropriate migration policies could foster development to great extent. By leveraging appropriate strategies including AI the potential of silver economy to boost growth and rebuild fiscal buffers amid  demographic headwinds is  possible. International development assistance to low income countries  with poor  management often led to deepening of their debt burden there  by jeopardizing living standards. In such a situation policies need to be calibrated  providing, infrastructure,investment, international co operation economic,  stability etc.Patterns of migration and refugee flows indicated that advanced economies accounted for the bulk of global movement and emerging market and developing economies accounted for almost half of overall net flows.According to IMF's Fiscal Monitor global public debt projections have been revised upward, while tarrifs, uncertainty and market volatility increased defense spendingetc.

CONCLUSION 

In summary World Economic Outlook April 2025 reported a slow down in world growth amid increasing down side risks.On the otherhand unfolding policy shifts implied huge uncertainties that has to be addressed  through calibrated approach to rebalancing  growth- inflation trade off,rebuild buffers, and reinvigorate medium term growth,so as to  reduce both internal and external imbalances. Policy measures required include- to promote healthy ageing,bridge gender disparities and enhanced alignment of migrant's skill with local labor market ,demands countering slow economic growth and fiscal pressures along with infrastructure development.  Public debt is expected to jump especially in USA, UK, China, France etc.For India IMF have suggested more appropriate criteria of Debt GDP ratio instead of concentrating on traditional fiscal deficit criteria. Global financial stability risks also increased due to heightened volatility of asset prices. Often discussed vulnerabilities are fluctuations in valuations, nexus between institutions  and banking system and debt sustainability challenges of highly Sovereign indebted countries.In fact  mounting downside risks dominate prevailing world economic outlook. Divergent  and swiftly changing policy  positions are likely to deteriorate sentiments making tighter global financial conditions. Under such conditions countries should constructively cooperate to promote a stable and predictable trade environment. Reviving or revamping of  World Trade Organisation (WTO) with  firm commitment by individual members towards multilateral agreement and trade could minimize trade and tariff disputes more effectively and efficiently. 


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