Global growth has outperformed forecasts for 14 months in a row, according to Citi's widely used economic surprise index, even as the war in Iran raises fresh concerns about energy costs and broader stability. The index, which compares actual economic outcomes over the prior three months with consensus forecasts, has been in positive territory since January 2025 and on Thursday is expected to eclipse its post-Covid-19 run, making this its second-longest streak on record behind the 2009-2011 period.
The index does not yet incorporate the economic consequences of the Middle East conflict, which has pushed oil prices higher and revived worries about growth. Those effects typically take time to work through published economic data, leaving a lag before any full impact shows up in the surprise metric.
Kristjan Kasikov, global head of Citi FX Quant Investor Solutions and the creator of the index two decades ago, said the persistent pattern of positive surprises runs counter to the expectation that surprises should be random and that forecasts would adjust to recent outcomes. "There is no reason for it to be consistently positive, surprises are normally pretty random, and expectations should adjust to past surprises," Kasikov said. He added: "The fact that this has not happened over the past year, means economists have been too stubborn in not adjusting their expectations for better than expected growth."
Kasikov noted that export and industrial production data had been notable contributors to the outperformance. For much of 2025, he said, headline indicators suggested global growth was slowing but by less than economists had anticipated. In the fourth quarter, that trend reversed as growth indicators accelerated, and they did so by more than forecasters expected. Kasikov suggested this dynamic may help explain why global equities performed strongly in 2025, pointing to the MSCI All Country World Index's 20.6% rise last year.
The resilience in activity has occurred despite heightened trade friction. U.S. President Donald Trump announced a series of tariffs on U.S. imports early in 2025; although some levies were trimmed from their initial peaks in April, tariff levels remain comparatively high. At the same time, massive investment into artificial intelligence and expansionary fiscal policy in several countries have supported demand and likely contributed to better-than-expected outcomes.
Still, economists and market observers caution that the recent spike in oil prices driven by the Middle East war could weigh on growth in coming months. If higher energy costs propagate through economies and trigger a broader acceleration in inflation, central banks may face renewed pressure to raise interest rates, which would have implications for markets and activity.
For now, the Citi index captures the disconnect between economists' predictions of pronounced hits from geopolitical tensions and tariff measures and the actual persistence of activity. Whether that gap closes as the lagged effects of higher oil and renewed uncertainty are recorded in official statistics remains an open question.
Clear summary
Citi's economic surprise index has been positive since January 2025, marking 14 straight months of upside surprises and positioning the run to become the second-longest on record. The index currently does not reflect the economic impact of the Middle East war and higher oil prices, which may weigh on growth and inflation in the months ahead.