BIS Annual Economic Report 2025

At a crossroads: policy challenges in a shifting world

The soft landing for the global economy that was coming into view suddenly seems more elusive. Long-established trade relationships began to fray as a wave of larger than expected tariff announcements in early April hit the global economy. Growth forecasts were cut, and financial markets were jolted as policy uncertainty surged. Even as some of the initial shock has dissipated, a sense of apprehension hangs in the air.

Long-standing economic relationships that have sustained global prosperity for decades are now under strain. Yet we should not look back with rose-tinted glasses. The global economy was already wrestling with structurally low productivity growth, persistently weak fiscal positions and the build-up of large and often opaque non-bank financial positions. Rapid and disruptive technological changes pose significant challenges of their own.

Central banks need to deal with the immediate fallout while keeping top of mind the deeper, structural weaknesses that threaten the resilience of the global economy. Success will depend on maintaining public trust – trust in central banks' capacity to act and do so in the public interest. Trust in their commitment to low inflation was decisive in quelling pandemic-era inflation. Now, trust in public institutions – including the trust in money – needs to serve as a fixed point for others to rally around.

This year's Annual Economic Report assesses the state of the global economy and discusses the key policy challenges. In addition, it offers an in-depth analysis of two important issues. The first is changes in the financial system, and their implications for the global transmission of financial conditions. The second is the design of a future monetary and financial system – one that embraces innovation to unlock new possibilities while preserving the trust in money that is fundamental to economic stability.