Inflation remains a concern. While current tax impacts on prices are muted, core inflation in the US is rising noticeably, with forecasts indicating further increases in the second half of 2025 as higher costs pass through to consumers.
Fiscal policy in many advanced economies continues to be lax, pushing public debt-to-GDP ratios higher. In the US, debt is projected to rise from 122% of GDP in 2024 to 143% by 2030. Medium-term risks include pressures from technological decoupling, cross-border labour restrictions, and declining foreign workforce inflows, which could result in inefficient resource allocation and constrained long-term growth.
Financial risks also include overvaluation of new technologies, such as artificial intelligence. If productivity expectations are not met, equity markets could see sharp corrections, reminiscent of the dot-com crash of 2000-01.
The IMF calls on policymakers to act urgently to ensure confidence, certainty, and sustainability. This includes addressing trade uncertainties with clear, transparent, and enforceable plans, maintaining fiscal discipline to reduce debt burdens, and safeguarding the independence and credibility of central banks to preserve price stability amid global growth slowdowns and potentially entrenched inflation pressures.