From resilience to robustness?
The past year saw investment in artificial intelligence (AI) ecosystems help global growth to withstand the blow from major tariff hikes. Yet geopolitical headwinds and rising fiscal and financial fragilities remain. Reinforcing the foundations of effective macroeconomic and financial policies is increasingly critical. Such foundations include fiscal sustainability, an unambiguous commitment to price stability and congruent prudential policies across the financial system. Progress on each of these dimensions bolsters trust in the capacity of economic policies to deliver on their mandates. Building on the resilience of the past year, the challenge for authorities is to work towards greater robustness and thus to contribute to sustainable growth going forward.
The year in review
Growth held up well in 2025, despite significant headwinds from higher tariffs and geopolitical uncertainty. Three factors stand out. First, the drag from higher trade barriers was lessened by effective tariff rates that were lower than initially anticipated, trade diversion and firms' willingness to absorb costs through lower margins. Second, a wave of optimism about AI spurred a surge in capital expenditure on AI infrastructure, lifting investment in the United States with spillovers along global supply chains. Third, animal spirits about AI lifted stock valuations, sustaining favourable global financial conditions.
Global economic pressure points call for policy discipline
Pablo Hernández de Cos says economic pressure points pose risks to global growth stemming from vulnerabilities in the financial system, strained public finances and major supply shocks which are still playing out.
The views expressed here do not necessarily reflect the views of the BIS member central banks.