Within the Eurozone, Germany and France are facing challenges with low industrial output and external demand, compounded by persistent inflation.

However, the Eurozone may see a slight improvement, with GDP growth projected to reach 1.5% by 2026, contingent on effective policy measures.

Recent data indicates that the global economy is showing signs of a potential recession, with a significant slowdown being observed.

This economic uncertainty is further underscored by recent volatility in financial markets, particularly within the US stock market.

The New York Federal Reserve has estimated a 29.4% probability of a US recession occurring within the next twelve months, although some assessments suggest a lower risk of 12%.

In terms of growth forecasts, the US has seen a downgrade from 2.8% in 2024 to 2.1% in 2026, while China's growth is also expected to slow from 4.9% to 4.4% during the same period.

Escalating trade tensions, particularly due to US tariff policies, are identified as a major factor contributing to this economic instability.

For countries like Pakistan, the potential for a global recession poses significant risks, impacting trade, remittances, and inflation.

To navigate these challenges, Pakistan must implement bold reforms and fiscal discipline to avoid further economic instability.

Globally, the IMF predicts that growth will stabilize at 3.3% for both 2025 and 2026, still below the historical average of 3.7% from 2000 to 2019.

The OECD has revised its global growth forecasts down to 3.1% for 2025 and 3.0% for 2026, indicating a continued trend of subdued economic growth.

In line with this, the World Bank forecasts a subdued growth rate of 2.7% for the same period, suggesting a prolonged low-growth trajectory.

The OECD warns that significant tariffs on key trading partners like Canada and Mexico are eroding investment confidence and household spending.