Markets have been broadly orderly so far—but financial stability risks are elevated
The Middle East conflict halted growth momentum. The right policies and stronger global cooperation are needed to contain the damage.
Rising defense spending requires difficult fiscal choices to avoid raising vulnerabilities, while post-war recovery hinges on policies to reduce uncertainty, rebuild capital, and help displaced people return home
Nonbank financial investors expand funding access for emerging markets, but their flows are highly sensitive to shifts in global risk sentiment
Amid trade tensions and high policy uncertainty, the path forward will be determined by how challenges are confronted and opportunities embraced
Subscribe for research and analysis of key economic and finance issues.
But risks are rising, including from the concentration of tech investment and the negative effects of trade disruptions, which may build over time
Debt, Stablecoins, AI, and Global Economy’s New Era Drew Blog Readers
Chart of the Week visuals illustrate major developments during a year of uncertainty and resilience
Capital markets integration, expanding opportunities for workers, and bigger consumer markets will allow companies to grow faster
Risks have risen as financial conditions tightened, with key vulnerabilities ahead
The magazine publishes insights on international finance, economics, & development.
Diversification has become harder since 2020 as stocks and bonds tend to move in tandem during sharp selloffs, adding to financial stability concerns
Policymakers should strengthen oversight of nonbank financial intermediaries, whose increasing interconnectedness with banks could exacerbate adverse shocks
Policymakers should broaden central clearing and monitor market-making, including by nonbank financial institutions, while dealers must continue to build resilience
Amid heightened uncertainty, policymakers will need to deal with complex trade-offs between debt, slower growth, and new spending pressures
Spending more efficiently and reallocating public funds toward investment and innovation can be a powerful growth strategy
Prudent anchors, corrective mechanisms, and supportive institutions can help countries comply with their fiscal rules and commit to sound public finances
Public approval is crucial for carrying out difficult reforms that can help countries lower debt and increase growth
The increase in debt in the last decade points to the need for lowering deficits, rebuilding space to deal with shocks, and strengthening fiscal rules
Large fiscal deficits and elevated debt levels call for greater fiscal prudence, but political forces are pulling in the opposite way
Policy choices will determine whether workers and firms are adequately prepared for the AI revolution
Artificial intelligence could boost Europe’s productivity, but gains will hinge on efforts to deepen the single market and the calibration of regulation
Read the latest insights into country and regional economic issues.
The power-hungry technology requires policies to help expand electricity supplies, incentivize alternative sources, and help contain price surges
Some countries risk missing out on the full economic benefits of AI, but more formal jobs and expanded digital access can help
New generative AI tools can redefine the relationship between governments and citizens, but strong leadership and safeguards are fundamental.
