First, the good news: in the face of one shock after another, the global economy has proved to be surprisingly shock-proof since the COVID-19 pandemic.

Despite steep tariff increases and historically high policy uncertainty during the last 12 months, global GDP growth in 2025 is set to come in at 2.7 percent—the pace that was predicted in January 2025. That rate should hold roughly steady through 2027. Inflation is abating. Interest rates are coming down. Investors are again showing signs of exuberance. At least by one measure, the global recovery from the coronavirus-era recession will go down as the strongest in six decades: global GDP per person in 2025 was 10 percent higher than it was on the eve of the pandemic. Subsequent shocks—wars, inflation, and tariffs—did less damage than most economists feared.