Weekly Update - The IMF highlights the strong resilience of the economies

In its latest World Economic Outlook, the International Monetary Fund has once again revised its growth forecasts upwards. The main economies have indeed shown resilience in the face of tariff shocks and a climate marked by significant political and geopolitical uncertainties. The IMF now expects global growth of 3.2% in 2025 and 3.1% in 2026.

This resilience is based on several factors. The IMF first explains that activity has withstood the tariffs shock thanks to the "front-loading" phenomenon: many companies anticipated tariff increases by accelerating their imports, which artificially boosted activity indicators in the first half of the year. Beyond this temporary effect, the depreciation of the dollar and the high profit margins observed since the pandemic have allowed companies to absorb part of the cost increases without immediately passing them on to prices. At the same time, the rapid reorganization of global value chains, with a redirection of trade flows towards alternative partners in Asia and Europe, helped limit the negative effects of protectionism. The IMF also highlights the driving role of artificial intelligence, which has stimulated investments in digital infrastructure, software, and equipment, particularly in the United States. This AI-driven dynamic has supported equity market valuations, generating a wealth effect favorable to households and helping to maintain consumption. These combined factors justify the upward revision of global growth forecasts for 2025. However, the IMF reminds that this resilience partly relies on transitory factors, whose effects may fade over the coming quarters.

A growing divergence between fiscal and monetary policies. Beyond these transitory effects, fiscal policies would overall remain supportive, with primary deficits still higher than pre-crisis levels. In the United States, the public deficit is expected to widen again despite revenues generated by tariffs, and public debt is projected to reach 143% of GDP by 2030. In the euro area, Germany is undertaking a significant fiscal stimulus, while several other countries maintain high deficits. Emerging markets, for their part, are beginning a moderate tightening from 2026 onwards, in a logic of sustainability. On the monetary side, trajectories are heterogeneous. The Federal Reserve could gradually lower its key interest rate to around 3.5–3.75% by the end of 2025. However, the IMF highlights that the resilience of the U.S. economy and the rebound in inflation could limit the extent of this easing. In the euro area, the ECB is expected to maintain a stable stance around 2%, while the Bank of Japan would begin a very gradual normalization towards 1.5%. The IMF emphasizes the need to preserve the independence of central banks, an essential condition to maintain anchored inflation expectations. It also warns of increased volatility risks in rates and currencies, notably due to sovereign refinancing needs and the shortening of debt maturities.

A more favorable scenario, but not without risks. The IMF’s central scenario remains one of economic resilience, supported in the short term by sectoral dynamics and fiscal policies. However, the institution identifies several downside risks that could jeopardize this trajectory. Persistent uncertainty over trade policies, labor supply tensions related to migration policies, as well as budgetary and financial vulnerabilities are all sources of fragility. The IMF also warns of the risk of a valuation correction, particularly in the artificial intelligence sector, if the expected productivity gains do not materialize. Finally, the IMF cautions about the growing exposure of banks’ commitments to non-bank financial companies such as private assets. Conversely, upside scenarios could emerge: a moderation of trade tensions, accelerated adoption of AI with productivity gains spreading, or a renewed push for structural reforms in advanced economies.

Our investment strategy appears highly consistent with the IMF’s analyses. The strengthened and geographically diversified positioning in equity markets, notably in the United States, Europe, and emerging markets, fully aligns with the scenario of economic resilience driven by innovation and supportive policies. Moreover, our underweight stance on sovereign bonds reflects the IMF’s concerns about the sustainability of public finances and the volatility of long-term rates, especially in advanced economies.

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