BIS Signals Breaking Point for Global Economy as Protectionism and Debt Rise

The Bank for International Settlements (BIS), which advises central banks around the world, says the global economy faces serious risks right now.

In its latest annual report, the BIS points to growing trade fights—especially new tariffs from the United States—and ongoing political tensions between countries as big problems that could hurt everyone.

The BIS says these trade barriers and disagreements are making the world economy weaker. For years, the global economy has grown slowly, and productivity—the amount of goods and services produced—has not improved much.

Now, with more countries putting up trade barriers, it is getting even harder for businesses to plan and invest. The report also highlights that people are losing trust in important institutions like central banks and governments.

This lack of trust makes it harder for officials to manage problems like inflation, which has been more unpredictable since the COVID-19 pandemic. Many people now expect prices to keep changing quickly, which makes it tough for families and businesses to plan their spending.

BIS Warns of Rising Global Debt

Debt is another big concern. Governments around the world have borrowed a lot of money, especially during and after the pandemic. The BIS warns that this high debt, along with rising interest rates, limits how much governments can spend if another crisis happens.

If debt keeps rising, countries could struggle to pay it back, which might cause even more financial trouble. The value of the U.S. dollar has dropped by 10% since the start of 2025, the biggest fall for the first half of a year since the 1970s.

The BIS says this is mostly because foreign investors are protecting themselves against currency swings. So far, there is no sign that investors are fleeing U.S. markets, but the BIS is watching closely.

The report also notes that non-bank financial firms, like investment funds, now play a bigger role in global finance. This means that financial shocks can spread faster between countries, making the system more fragile.

The BIS urges governments and central banks to act now. They recommend making trade easier, cutting debt, and keeping public finances under control. Without these changes, the world could face more economic problems and slower growth for years to come.

This story is based only on official facts and data from the BIS’s 2025 annual report.