Global growth lifted as markets brace for political crosswinds

S&P Global Market Intelligence has raised its GDP growth forecasts for 2025–26, signaling stronger resilience across key economies despite persistent uncertainty. The upgrade follows unexpectedly robust activity in the first quarter, as businesses moved early ahead of anticipated US tariff increases. The UK, in particular, is now forecast to grow by 1.1 per cent in 2025, nearly double the previous estimate. China’s outlook has also improved slightly, even as its pace moderates.

While markets have welcomed the upward revision, the broader picture remains unsettled. Tensions in the Middle East continue to simmer, and investors are watching closely as former US President Donald Trump signals a decision on possible action against Iran. A sudden geopolitical shock could quickly overshadow recent economic gains and reshape global sentiment.

Elsewhere, defence tech is drawing attention. Palmer Luckey’s autonomous submarine startup is scaling fast, with plans to expand its Australian team to 200 by the end of 2025. In the retail space, Temu is seeing a sharp rise in traffic following the closure of Catch, as shoppers look for alternatives amid shifting trade policies and evolving tax conditions.

Despite a drag in global IPO activity, which has dropped to a nine-year low, Asia shows early signs of recovery heading into the final quarter. Bell Potter and Morgan Stanley have also made selective upgrades across sectors, pointing to pockets of optimism in an otherwise cautious landscape.

The upward revision offers a degree of reassurance, but the months ahead will likely be shaped less by economic data and more by political decisions. For businesses and investors alike, navigating this environment will require both agility and a close eye on the global risk radar.