The world economy is not fine like the markets suggest. Finance chiefs feel they can't catch a break, and fiscal positions are weaker than during COVID, limiting support for citizens.

Highlights a pattern of crises every two years (COVID 2020, Ukraine 2022, tariffs 2023, Middle East 2024) creating persistent uncertainty.

The ECB now thinks in scenarios (baseline, adverse, severe) instead of simple upside/downside risks due to the difficulty of predicting the world economy.

Explains that the current situation is between adverse and baseline. An adverse scenario could involve a peace deal, while severe is full-blown war disrupting energy markets for months or years.

No one is optimistic at the moment. Leaders are level-headed but worried about interest rates, Middle East fallout, IMF support needs, fragmentation/de-globalization, tariffs, and private credit risks.