After Trump's election to the presidency of the United States – amid growing international conflicts, the end of free trade and an unprecedented use of presidential prerogatives in matters of fiscal, industrial and immigration policy – the widely shared opinion among economists was that we would witness a sharp slowdown in global growth, to a marked slowdown in international trade, to a resurgence of inflation, especially in the United States, and to a strongnstability of financial markets.
Economic forecasts for early 2025
In April 2025 the International Monetary Fund It drastically reduced the estimates, formulated just a few months earlier, for global economic growth for the current year (-0,5%), for the United States (-0,5%), for the euro area (-0,9%), for emerging countries (-0,5%), and in particular for Mexico (-1,7%). Obviously, world trade was also expected to contract sharply (-1,5%), while inflation, after the surge in 2022, was expected to slow its decline. The volatility of financial markets, after the shock of the so-called "Liberation Day” on April 2, was expected to be high. Finally, all New Keynesian models predicted that the introduction of tariffs would lead to a strengthening of the dollar, as occurred in the first weeks of the year and in previous crises.
What really happened
In the following months, however, the main international forecasters had to revise these forecasts in a more positive sense pessimistic. In July and then in October, for example, the World Economic Outlook of the IMF has partially corrected its aim, offering aless catastrophic image of the economy global. The latest available data, although made uncertain by the long shutdown of the American administration, suggest that the final figures could be even better than the most recent forecasts. It is enough to recall the preliminary data on the growth of US GDP in the third quarter of 2025, annualized at 4,3%, or that ofinflation (headline CPI) for November, equal to 2,7%. Even more surprising are the data on Mexican manufacturing exports to the United States, which grew by 9% between January and November compared to the same period of the previous year, despite the heavy tariffs imposed by the Trump administration.
This is without taking into account the performance of the financial markets, in particular of bags, which have achieved notable results in many areas of the world thanks above all to to the technology, financial and defense sectors. The dollar, instead, experienced the worst devaluation of the last decade.
Why did economists get it wrong?
The reasons for this widespread inability to predict there are many. It certainly doesn't help the often chaotic and unpredictable modality with which decisions are made at the White House on tariffs, industrial and fiscal policies, nor the frequent interference in monetary policy. Equally relevant is the difficulty of understanding the interrelationships between politics and economics in a world that has become multipolar and conflictual. Added to this is the high elasticity shown by the private sector in managing constraints, sanctions and duties through careful inventory management and, above all, through trade and production triangulations. Finally, the complexity of evaluating the effects of a technological leap of historic significance like the current one and, consequently, the rationality of the huge investments underway.
More generally, it must be recognized that the mathematical and statistical models used by economists and econometricians to formulate scenarios work well in a stable context such as that of the "Great Moderation" (1984-2007), in which it is permissible to assume hypotheses other things being equal to isolate the effects of certain shocks. However, these models struggle to capture the profound interrelationships between geopolitics and economics in a rapidly changing world. Furthermore, many economists have a longstanding difficulty incorporating these factors into their models. the “bounded rationality” of behaviors individual and collective.
And in 2026? Maybe it's better to flip a coin.
Theforecasts for 2026 seem to suffer from the same difficulties. On the one hand, there are those who believe that the negative effects of the Trump administration's policies will eventually manifest themselves, albeit with a greater delay than initially expected. Furthermore, the financial markets would be close to the outbreak of a big bubble, in a context dominated by four "O"s that warn of crises: overvaluation, over-ownership, over-investment e over-leverage (i.e., overvaluation of stock prices, too much money invested in the stock markets, excessive business investment, over-indebtedness).
On the other hand, economists like Nouriel Roubini they claim that we are at threshold of a technological revolution of historical significance. The developments of thegenerative artificial intelligence, robotics and biogenetics could permanently increase global productivity and growth, particularly in the United States. Deregulation and an expansionary fiscal policy promoted by the Trump administration would also contribute to a sustainable and non-inflationary growth. Europe, however, will hardly be able to fully participate in this celebration.
Finally, there is a central scenario which hypothesizes a moderately strong and stable economy, capable of once again denying the forecasts of a cyclical recession, thanks to robust investments in artificial intelligence, an expansionary fiscal policy on both sides of the Atlantic and a Federal Reserve more accommodating. Theinflation It would, however, remain sticky, hitting low-income families in particular, without however unmooring expectations.
The probability of success of this scenario remains limited, however. In technical terms, we are faced with a multimodal distribution, with rather thick tails, which make any forecast extremely uncertain.
At this point, perhaps, It's really better to flip a coin. Ultimately, “Recognizing one’s limitations is the first step towards wisdom” (Goethe).
