Global | The forces shaping the outlook

The outlook for the global economy will come under renewed scrutiny in two weeks, with the IMF meetings and the release of its latest macroeconomic forecasts. Compared with the July projections, there are unlikely to be substantial changes to the growth outlook for the world’s major economies, beyond some adjustments reflecting recent developments in economic activity, which, at least in Europe, has been surprising to the upside. But the fact that global growth remains relatively robust does not mean that things are standing still. Quite the opposite: a great deal is changing. Over the summer, there have been numerous developments in geopolitics, the global economy, and financial markets. At least three deserve particular attention.

The first is that the temporary truce between the United States and Iran expired in mid-August without an agreement. The Strait of Hormuz remains largely closed, and there is little sign of a resolution to the conflict, at least before the U.S. elections. Oil prices have fluctuated sharply, with Brent crude trading around and above $100 per barrel. The spread of the conflict to the Red Sea and the intensification of the war between Russia and Ukraine have added further pressure to hydrocarbon prices. Higher energy costs have pushed inflation back up, to above 3% in both Europe and the United States. Although the impact on core inflation has so far been limited, the risks are clearly tilted to the upside.

This brings us to the second major development of the summer: the response from central banks. Both the Fed and the ECB have adopted a more hawkish tone. Kevin Warsh was the first to do so at Jackson Hole, taking a distinctly more hawkish stance, followed by several ECB officials. This rhetorical shift translated into rate hikes by both central banks in September, while markets are pricing in additional moves over the coming quarters.

The third major development has taken place in financial markets and is harder to interpret, given the multitude of factors that may be at play: the sharp rise in long-term sovereign bond yields, which prompted the U.S. Treasury to intervene in an effort to contain the increase, so far with limited success. The intervention was preceded by U.S. support for Japan in propping up the yen, a move widely interpreted as an exercise in self-help aimed at preventing Japanese investors from selling U.S. Treasuries. The rise in long-term yields probably has more to do with the strength of private investment and the shift in central bank policy than with long-term inflation expectations, which have barely changed, or with fiscal risks—evident though they are.

Indeed, it is precisely the strength of private investment that explains why, despite the accumulation of negative news, the global growth outlook remains relatively solid. AI investment accounts for a significant share of U.S. growth, but signs of strength in the sector can also be seen in global exports, particularly from Asia, as well as in some European indicators. Europe is also benefiting from higher defense and infrastructure spending, together with other fiscal support measures designed to cushion short-term challenges such as the energy shock. All of this continues to be reflected in third-quarter PMI indicators, which have gained momentum.

This balance between negative forces on the one hand and the strength of AI investment and fiscal spending on the other is precarious and exposed to a wide range of risks, reflecting political and geopolitical instability around the world. Developments in the Middle East are extremely difficult to anticipate: nonlinear increases in energy prices cannot be ruled out if reserves begin to run low. Concerns about European security in the face of Russia add another layer of uncertainty. Risks to public debt sustainability amid fiscal easing could reinforce the recent rise in long-term interest rates. AI, too—whose promise of productivity gains underpins much of the current investment optimism—is subject to risks, particularly around valuations.

It will be interesting to see how the IMF interprets the interplay of forces shaping such a complex global outlook.

Press article. Published in Expansión on October 2, 2026.