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There are several advanced economies in the world and in Europe (e.g. including Austria, Germany, Italy, France, Switzerland, etc.) that have shown decreased growth patterns recently. Some states are experiencing the sharpest economic contractions and lowest growth; according to the latest IMF projections (April 2025), a mix of fragile developing nations and major advanced economies make the list. However, digital transition can save the day…
Background
After several enduring, prolonged as well as unprecedented recent series of shocks, the global and European economies appeared to have stabilized, with steady yet underwhelming growth rates. However, the “development landscape” has changed as governments around the world re-oriented their economic policy priorities; besides, the global uncertainties have climbed to new highs.
Forecasts for global growth have been revised markedly down compared with the January 2025 World Economic Outlook (WEO) update, reflecting effective tariff rates at levels not seen in a century and a highly unpredictable political-economy’s environment. Thus, the WEO notes, the “global headline inflation is expected to decline at a slightly slower pace than what was expected this January”. Besides, intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments: i.e. divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions, the outlook continues; “ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects, and scaling back international cooperation could jeopardize progress toward a more resilient global economy”.
The WEO’s composition
In the first chapter “Global prospects and policies”, the outlook depicts global growth’s projection to decline after a period of steady but underwhelming performance, amid policy shifts and new uncertainties. Global headline inflation is expected to decline further, notwithstanding upward revisions in some countries. Risks to the outlook are tilted to the downside. Escalating trade tensions and elevated policy-induced uncertainty may further hinder growth. Shifting policies could lead to abrupt tightening of global financial conditions and capital outflows, particularly impacting emerging markets. Demographic shifts threaten fiscal sustainability, while the recent cost-of-living crisis may reignite social unrest. More limited international development assistance could push low-income countries deeper into debt, jeopardizing living standards. At this critical juncture, policies need to be calibrated to foster international cooperation while ensuring internal economic stability, thereby helping reduce global imbalances.
To stimulate growth and ease fiscal pressures, policies that promote healthy aging and enhance labor force participation among older individuals and women could be implemented, as discussed in chapter 2. The chapter notes, that as the global population ages, economies worldwide are experiencing significant demographic shifts with profound implications. It explores the rise of the “silver economy,” focusing on the extent of healthy aging and its impact on labor markets, the broader economic implications of demographic changes, and the role of targeted policies in mitigating the adverse effects of aging. The analysis reveals that while population aging poses challenges such as slower growth and increased fiscal pressures, healthier aging trends offer a silver lining by boosting labor force participation, extending working lives, and enhancing productivity. The chapter also underscores the importance of policies that support healthy aging, increase labor force participation among older individuals, and close gender gaps in the workforce. By leveraging these strategies, countries can harness the potential of the silver economy to boost growth and rebuild fiscal buffers amid demographic headwinds.
Additionally, productivity growth can be fostered with better integration of migrants and refugees and mitigation of skill mismatches, as detailed in Chapter 3. This chapter titled “Journeys and junctions: spillovers from migration and refugee policies”, shows that the movement of migrants and refugees has become a fixture of public debate. Hence, the chapter examines how changes in the stringency of migrant and refugee policies can “alter the journeys and legal pathways people choose to take within and between economies”.
For example, stricter policies can deflect flows of people to new destinations: those economies can experience short-term challenges from strains on local services but ultimately benefit in the longer term. Costs are likely to be more severe where challenges to integrate newcomers are larger (notably in emerging market and developing economies) and their skills are not well matched with local labor market needs. Benefits can materialize sooner by boosting infrastructure investment and promoting private sector development. International cooperation can also help by more evenly distributing short-term costs across economies.
Source and citation from: https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025?cid=ca-com-homepage-SM2025-WEOEA2025001
Fiscal policy under uncertainty
Escalating uncertainty and policy shifts are reshaping the fiscal outlook. Global public debt projections have been revised upwards, while tariffs, uncertainty and market volatility, increased defense spending, and challenging foreign aid are intensifying risks.
Countries must implement gradual fiscal adjustments within credible medium-term frameworks to reduce debt and build buffers against heightened uncertainty.
Reforms to major expenditure programs, such as energy subsidies and pensions, are crucial to reducing fiscal vulnerabilities while fostering growth. Stakeholder acceptance is critical for advancing such reforms. Shoring up public support requires strategic design, effective communication, robust safety nets, and trust in governance.
Source: https://www.imf.org/en/Publications/FM/Issues/2025/04/23/fiscal-monitor-April-2025.
Conclusion
The IMF database helps to find data on national accounts, inflation, unemployment rates, balance of payments, fiscal indicators, trade for countries and country groups (aggregates), as well as corresponding commodity prices. IMF supplies data which are available since 1980 to the present; the projections are covering two years’ period. Additionally, medium-term projections are available for selected indicators and for some countries, data are incomplete or unavailable for certain years.
More in: https://www.imf.org/en/Publications/WEO/weo-database/2025/April
From conflict-driven collapses to stagnation in Europe, these ranking reveals where economic headwinds are hitting hardest. According to the present WEO’s update, most countries -at this critical geo-political situation- should “work constructively to promote a stable and predictable trade environment and to facilitate international cooperation, while addressing policy gaps and structural imbalances at home”; that would help to secure both internal and external economic stability. The IMF’s World Economic Outlook uses a “bottom-up” approach in producing its forecasts; that is, country teams within the IMF generate projections for individual countries. These are then aggregated, and through a series of iterations where the aggregates feed back into individual countries’ forecasts, forecasts converge to the projections reported in the WEO. Because forecasts are made by the individual country teams, the methodology can vary from country to country and series to series depending on many factors.
The WEO’s baseline forecast is that the world economy will continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies (where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025) will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025.
The forecast for global growth five years from now (at 3.1 percent) is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually. The global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability.
Main source: https://www.imf.org/en/publications/weo
Additionally: https://www.imf.org/en/Research
AI startups for growth
AI startups cover various growth sectors, industries and services: i.e. from machine learning to creativity, transport and energy, culture and art.
Thus, Forbes has made a list of startups companies; the customer service platform Sierra raised the most funding e.g. about $110 million.
Companies producing AI productivity tools received the most funding of the companies covered $704 million. For example, the following companies in the following digital sectors and with investment size (in millions in 2024): – LangChain (in AI development & tools) with $35M; – Baseten (AI development & tools) with $60M; Replicate (in AI development & tools) with $60M; – Unstructured (in AI development & tools) with $65M; – Perplexity (in productivity) with $102M; – Sana (in productivity) with $82M; – Codeium (in productivity) with $93M; – Harvey (in productivity) with $106M; – DeepL (in productivity) with $100M, and – Sierra (in productivity) with $110M.
Almost all sorts of businesses are presently leveraging various AIs and implementing regulatory means “where innovation by the brightest creative minds in the field is rewarded”. While big tech may be capturing headlines, small and medium-sized AI businesses are building innovative, novel AI-driven solutions to everyday problems
Regardless the AI’s transformative nature affecting people’s work, creating new opportunities at all levels of the national economy, its ability to deliver fruitful potentials remain uncertain, clouded by policy choices now taking shape.
Technology giants, such as Google, Microsoft, NVIDIA, and OpenAI are thought to be driving the digital market, creating competition problems for smaller companies or those specializing purely in AI.
Source and citation from: https://www.visualcapitalist.com/sp/taa02-25-ai-startups/