Analysts at CAPE Economic Research and Consulting firm, have projected that looking ahead to the fourth quarter of 2025, the global economy is expected to encounter fewer acute shocks than in the first half of the year, as markets and policymakers gradually adapt to tariff-related disruptions and persistent geopolitical tensions.
However, the experts, in the firm’s just published ‘Economic Newsletter, Volume 4, Issue 10, October 2025, projected that despite the anticipated slower shocks, regional divergences would remain pronounced.
According to them, in advanced economies, the U.S. labour market is showing early signs of easing, even as services inflation remains elevated and household leverage continues to rise while the euro area is likely to exhibit tentative recovery signals, although renewed price pressures may temper growth momentum.
The analysts stated that among emerging markets, China and India were projected to remain the principal drivers of global growth, yet China’s property-sector fragilities and ongoing trade frictions continue to pose downside risks to its medium-term trajectory.
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In addition, the experts projected that monetary policy paths are set to diverge further across economies as major central banks in advanced markets are likely to pursue measured and conditional easing, contingent upon sustained disinflation in core services and moderating wage growth, underscoring a delicate trade-off between supporting fragile output growth and preserving price stability.
Conversely, they predicted that central banks in Latin America and sub-Saharan Africa were expected to maintain restrictive stances through early 2026 to anchor inflation expectations and stabilize exchange rates amid relatively high developed-market yields.
The firm’s analysts further projected that as policy rates in advanced economies gradually decline, capital rotation toward higher-yielding emerging-market assets could strengthen local equities and bond markets, but such inflows would remain susceptible to abrupt reversals if yield differentials compress unexpectedly.
On global trade trend in Q4 this year, the CAPE Economic Research and Consulting researchers forecasted: “Global trade growth will likely remain subdued, reflecting the structural fragmentation of manufacturing and agricultural value chains following the recent escalation of tariff and non-tariff barriers.
“In commodity markets, price dynamics are expected to remain uneven. OPEC+ output additions and robust U.S. shale production are exerting downward pressure on oil prices, though any renewed geopolitical escalation, particularly in the Middle East, could swiftly reverse this trend.
“Ample gas and coal inventories will continue to moderate energy prices, while China’s infrastructure stimulus is anticipated to underpin a modest recovery in industrial metals, particularly copper and aluminium, in the fourth quarter of 2025. By contrast, agricultural commodity prices are projected to soften further amid strong global harvests and declining freight costs”, they added.
The experts concluded that in this complex environment marked by geopolitical risks, divergent monetary regimes, and asynchronous commodity cycles, policy coordination and adaptability would be crucial.
To brace the storms and achieve growth in their economies, the researchers advocated: “Policymakers must dynamically calibrate interest-rate paths in line with evolving inflation and wage trends, closely monitor capital-flow and exchange-rate volatility, anticipate sector-specific commodity movements, and advance diplomatic and trade initiatives to restore confidence and resilience in global value chains.”
