An Economy of Contradictions: Growth Up, Confidence Down

The global economy is becoming an economy of contradictions, where positive headline data clashes with falling long-term confidence. A new report from a major financial body perfectly captures this, upgrading 2025 global growth to 3.2% while simultaneously describing the outlook as “dim” and warning of eroding certainty.
This contradiction is most clearly seen in the United Kingdom. On paper, its economy is a G7 leader with 1.3% growth this year. But in reality, confidence that inflation is under control is falling. The report’s chief economist noted that UK households and firms are becoming “less certain that inflation is coming down quickly,” a psychological shift that undermines the positive growth data.
The same contradiction applies to global trade. The data shows “unexpected resilience” to tariffs for now. But the report argues that business confidence in a stable, predictable trade environment has been shattered, which will inevitably lead to lower investment in the long run.
Financial markets present another paradox. Stock prices are high, reflecting apparent confidence. Yet the report warns these “stretched valuations” are a source of instability, suggesting the market’s confidence is brittle and could evaporate quickly, triggering a sharp downturn.
The report suggests we are in a unique moment where the lagging indicators (like current GDP) look good, while the leading indicators (like business confidence and inflation expectations) are flashing red. This economy of contradictions is inherently unstable, and the report warns that reality will eventually have to align with the more pessimistic outlook.