On the occasion of the publication of its autumn forecasts, the International Monetary Fund admitted that it had been wrong. The global economy remained more dynamic than expected.
However, the next few quarters look uncertain, especially for exporting countries. This validates our portfolio strategy of investing in major economies that can rely on their domestic market.
A trade war that did not take place
With Donald Trump launching a global trade war, most forecasters predicted the worst for the global economy.
The escalation of trade sanctions, following the sharp increase in tariffs decided without basis by the White House host, risked provoking a global economic crisis. The probability of a US recession was high if the US's trading partners applied heavy tariffs in retaliation.
But in the end, this catastrophic scenario did not come to pass because the trade war never really materialised.
Over the months, the United States' main trading partners have accepted higher American tariffs to maintain access to the world's leading market. Even China, the only country to have raised tariffs to make Trump bend, has finally favoured negotiation to avoid a complete blockage of its shipments to the United States.
As a result, world merchandise trade has not collapsed. Thanks to the development of new trade flows outside the United States, it has even remained dynamic in recent months.
Inflation under control also helped
Other factors contributed to the global economy's resilience in 2025. Firstly, the feared price slippage with the increase in customs duties has been contained. The tax actually applied to imports is now lower than the amount announced.
Moreover, it has not (yet) been passed on to consumers. The latter have therefore not suffered a drop in their purchasing power because of the trade war.
This is all the less the case as Chinese producers sell off their products to ship them abroad. This Chinese disinflation limits global inflationary pressures.
The sharp decline in energy prices is also contributing to the moderation of inflation. As a positive consequence of this situation, central banks have been able to lower interest rates to support economic activity.
The boom in investment in artificial intelligence (AI) across the entire value chain (from microprocessors to data centres to the electricity to run them) is the last essential element that has driven GDP growth.
Tariffs bring uncertainty to 2026
While the global economy has held up in 2025, the next few quarters look uncertain. The practical application of higher tariffs will penalise world trade, which is heading for very weak growth in 2026.
In the four corners of the globe, the industrial sector is suffering from disruptions in the flow of goods. Supposed to benefit from the tariffs imposed by Trump, the US economy is showing signs of weakness, especially in the labour market, where job creation has been at a standstill since May.
The build-up of large stocks before the introduction of the new tariffs and companies' relative restraint in raising prices have so far relatively spared consumers' wallets. But it is still likely that they will end up footing the bill, which will stoke inflationary pressures and weaken household consumption.
Central banks are likely to face a difficult choice: raise interest rates to contain inflation or lower them to support economic activity.
Stock markets on borrowed time?
Today, investors are focused on the good news, and the stock markets continue to rise. This also causes a significant wealth effect that supports household consumption, particularly in the United States, where wealth is soaring in parallel with stock market indices. This positive momentum can continue, barring an unexpected, devastating event.
The main risk, however, is that the profitability of significant investments in AI will be called into question, even though it is supposed to deliver productivity gains and benefits that have yet to be demonstrated. If investors doubt the promises of AI, the stock markets, propelled to the top by a few technology stocks, will fall sharply.
A sharper-than-expected economic slowdown due to trade tensions could also halt the good stock market momentum.
Finally, a price slippage that would severely curb consumption and force the monetary authorities to tighten their policy is a scenario that should not be completely ruled out in the medium term.
Announcing an upcoming stock market correction is of no interest because it is a certainty. But will it be in two months or in two years? This is the essential question that no one can answer.
Build your long-term strategy
For this reason, an equity investment should always be long-term, with a view to several years. This is also why we recommend a diversified portfolio that can weather the next crisis at lower cost and, above all, bounce back when the recovery comes. See our suggestion below:
With world trade set to be less dynamic, we avoid regions, such as the Eurozone or Japan, whose economic dynamism depends almost exclusively on exports. Conversely, we favour countries (the United States, China, India) where domestic demand is expected to play a key role in GDP growth.