Global Economy Navigates Turbulent Waters Amid Geopolitical Strife and Policy Shifts in November 2025

The global economy is entering November 2025 facing a complex and challenging landscape, marked by persistent geopolitical tensions, increasing policy fragmentation, and profound structural shifts. Despite some equity markets reaching unprecedented highs, underlying issues suggest a significant re-engineering of the global order, with risks heavily biased towards lower growth, according to an analysis from vertexaisearch.cloud.google.com.

Geopolitical tensions remain a primary concern, with ongoing conflicts such as the Russia-Ukraine war and the Israel-Hamas war fueling regional instability and impacting global energy and food security, as reported by S&P Global. Additionally, the complex US-China relationship continues to influence trade patterns and tariff costs, contributing to a volatile international environment.

Policy fragmentation is also intensifying, characterized by a rise in protectionist measures and diverging national economic strategies. The World Bank noted that heightened policy uncertainty and escalating trade barriers are significantly weighing on global growth prospects, particularly for emerging market and developing economies.

Structural shifts are fundamentally reshaping the economic playbook, driven by factors like fiscal expansion, the increasing dominance of industrial policy, and the transformative impact of artificial intelligence. The Swiss Re Institute highlighted that these shifts, alongside aging societies, are redefining the global economy and its risk landscape.

Paradoxically, this period of heightened uncertainty coincides with global equity markets hitting record highs, with valuations exceeding $148 trillion, as confirmed by Kaohoon International. This surge is largely attributed to strong corporate earnings, robust consumer spending, and an investment frenzy surrounding AI technology, according to U.S. Bank.

However, this market exuberance masks a projected slowdown in global GDP growth. The OECD's September 2025 Interim Report forecasts a decrease in global GDP growth from 3.3% in 2024 to 3.2% in 2025 and 2.9% in 2026, primarily due to higher tariffs and ongoing policy uncertainty. The International Monetary Fund (IMF) similarly projects global growth to slow, with risks tilted to the downside.

The confluence of these factors suggests that while certain sectors may thrive, the overall global economic outlook for November 2025 is one of tenuous resilience amid persistent uncertainty, demanding careful navigation from policymakers and businesses alike.

• Background Context of Fragmentation: Geoeconomic fragmentation, characterized by the division of the global economy into competing regional blocs, has been a growing trend since the 2008-2009 Global Financial Crisis. This phenomenon has intensified over the past eight years, driven by governments and businesses seeking to protect against supply chain disruptions and rising trade barriers, as detailed by MAX Security. This shift marks a departure from a traditionally U.S.-centric system towards a more multipolar balance of power, where regional self-sufficiency and protectionism gain prominence, according to clairinvest.

• Key Stakeholder Economic Outlooks: Major international bodies offer a cautious outlook for 2025. The OECD projects global GDP growth to slow, with inflation easing but significant risks lingering, urging central banks to remain vigilant and governments to pursue fiscal reforms. The World Bank forecasts weaker growth, particularly in emerging market and developing economies, citing rising trade barriers and policy uncertainty as key impediments. The IMF, in its October 2025 World Economic Outlook, anticipates a slowdown in global growth, highlighting downside risks from prolonged uncertainty and increased protectionism, and calling for credible, transparent, and sustainable policies.

• Economic Implications: The global economy faces several critical implications. Inflation is projected to decline in most G20 economies, but remains stubbornly above target in some, notably the United States, with higher tariffs expected to contribute to price increases in affected countries. Global trade volumes, while showing signs of recovery, are expected to decelerate significantly due to protectionist measures and elevated tariffs. Furthermore, high levels of public and private debt, exceeding 256% of global GDP, pose a substantial risk, potentially necessitating fiscal austerity measures, as reported by mapfre.

• Geopolitical Impact on Stability: Geopolitical events continue to exert a profound influence on global economic stability. Conflicts such as the Russia-Ukraine war and the Israel-Hamas war are not only sources of regional instability but also disrupt energy and food supplies globally. The ongoing trade and technological tensions between the US and China are actively reshaping global economic structures and supply chains, leading to increased uncertainty. Additionally, the rising frequency and severity of cyberattacks represent a new and evolving frontier in global conflict, posing significant threats to critical infrastructure and financial systems.

• Details of Policy Fragmentation: The trend towards policy fragmentation is evident in various protectionist measures and trade policies. The rise of nationalism and protectionism has led to increased scrutiny of globalization, with examples including the EU's Digital Tax, China's "Dual Circulation" strategy, and India's tariffs on electronics. Notably, US bilateral tariff rates have seen a significant increase, reaching an estimated effective rate of 19.5% by August 2025, the highest since 1933, according to the OECD. In response, businesses are actively restructuring supply chains, regionalizing operations, and focusing on core markets to mitigate risks associated with this fragmentation.

• Structural Shifts and Long-Term Trends: The global economy is undergoing fundamental structural changes. There is a clear shift towards fiscal expansion and the increasing dominance of industrial policy, which the Swiss Re Institute suggests could lead to structurally higher inflation and rising debt burdens. Artificial intelligence (AI) is a major driver of economic transformation, spurring significant investment in high-tech sectors and contributing to market exuberance, though concerns about aggressive valuations persist. Furthermore, aging populations represent a long-term demographic challenge that major economies must address.

• Future Outlook and Policy Recommendations: Looking ahead, central banks are advised to remain vigilant and respond promptly to shifts in price stability risks, continuing interest rate reductions where underlying inflation moderates towards target. Policymakers are urged to restore confidence through credible, transparent, and sustainable policies, rebuild fiscal buffers, and safeguard central bank independence. To enhance resilience, companies are increasingly adopting advanced technologies like AI-driven simulations and digital twins to anticipate bottlenecks and adapt sourcing strategies in a rapidly changing global environment.