to have a significant impact on global activity in 2025. 2025. Eventually, global GDP growth was 3.4 percent in 2025, 0.6 percentage point stronger than expected. forecast errors and other unobserved variables, but also such as fiscal policy, financial conditions, and artificial intelligence (AI) investment. While the WEO global exercise, simulations conducted using the IMF's on information available up to April 4, 2025. It incor- 25 percent, alongside countermeasures from Canada and China. Trade policy uncertainty had also increased markedly, contributing to weaker investment incen- tives and tighter financial conditions. These were only and Germany. Taken together, these factors reduced global growth by 0.6 percentage point in 2025, close dissipate, other factors such as greater use of prefer- Accommodative financial conditions. Despite an Reduced impact of tariff. US firms and households initial tightening in April, financial conditions eased sovereign spreads narrowed in many emerging markets. small temporary boost to activity in some economies. tainty shock and improved risk sentiment, includ- ing that around A1. The US dollar depreciated by 18 percent by the end of the year, reflecting bilateral 6 percent between April 1 and the end of December, tions. Countermeasures by trading partners were also a persistent increase in US tariff. While the sources scaled back. The actual collected tariff rate has been the announced rate in December 2025. While the may have reflected medium-term risks, it provided gap may partly refect shipment lags, which ought to economies (Juselius, Wooldridge, and Xia 2025) and The author of this box is Chris Jackson.