The global outlook is becoming increasingly challenging. Substantial increases in barriers to trade and heightened policy uncertainty will have marked adverse effects on growth prospects if they persist. On the assumption that tariff rates as of mid-May are sustained, global GDP growth is projected to slow notably this year and to remain subdued in 2026. Growth could be even weaker if there are additional increases in trade barriers and policy uncertainty. Inflationary pressures could be stronger than expected due to higher trade costs and rising inflation expectations, prompting more restrictive monetary policy and repricing in financial markets. On the upside, a reversal of the recent increase in trade barriers, steps to reduce regulatory burdens or an early resolution of geopolitical conflicts could have positive impacts on global growth. The key policy priorities are to ensure a lasting decline in policy uncertainty, trade tensions and inflation, establish a credible fiscal path to debt sustainability while providing temporary support to those vulnerable to economic shocks, and implement ambitious reforms to strengthen growth prospects and investment.