The latest ‘Chief Economists Outlook’ report released by the World Economic Forum (WEF) has indicated that global economy is set to face significant challenges in 2025, with 56% of chief economists surveyed expecting conditions to weaken during the year.
The WEF, in a news release on the report’s findings issued on Thursday, disclosed that only 17% of the economists foresee an improvement, pointing to heightened uncertainty in key regions and the need for measured policy responses worldwide.
According to the report, while the United States appears poised for a short-term boost – with 44% of chief economists predicting strong growth in 2025, up from 15% when they were asked in August last year – the outlook for the year ahead remains less optimistic for other major economies.
This is even as the findings indicated that Europe continued to rank as the weakest region for the third consecutive year, with nearly three-quarters (74%) expecting weak or very weak growth.
Similarly, the experts projected that China’s economic momentum would slow amid subdued consumer demand and weaker productivity, further illustrating the uneven and uncertain nature of any global recovery.
Commenting on the report’s findings, the WEF’s Head of Economic Growth and Transformation, Aengus Collins, said: “The latest Chief Economists Outlook reveals a global economy under considerable strain. The growth outlook is at its weakest in decades and political developments both domestically and internationally highlight how contested economic policy has become. In this environment, fostering a spirit of collaboration will require more commitment and creativity than ever.”
On the US Economy, the new report underscores the significance of the recent US presidential election, with 61% of chief economists characterizing the impact for the global economy as a long-term shift rather than a short-term disruption, and that major changes are expected in areas such as trade, migration, deregulation, fiscal policy and industrial policy.
The chief economists’ solid outlook for US growth in 2025 is in line with their expectation of near-term stimulus and of rising wages. However, they remain mindful of risks, with almost all expecting a rise in public debt levels (97%) and higher inflation (94%).
The report also revealed on the growing strain in efforts for global integration that in addition to subdued global growth prospects, pressures on the world’s economic interconnectedness would heighten.
For instance, avast majority of respondents (94%) predict further fragmentation of goods trade over the next three years, while 59% expect services trade to follow a similar path while more than three-quarters also foresee higher barriers to labour mobility, while almost two-thirds point to rising constraints on technology and data transfers.
However, the report indicates that financial sector stands out as an exception, with less than half (48%) expecting an increase in fragmentation, likely reflecting the pivotal role of cross-border financial flows in modern economies.
Nevertheless, the economists surveyed in the WEF report projected that domestic and international political developments, supply-chain realignments and security concerns loomed large, and that these shifts would likely push up costs for businesses and consumers alike over the next three years.
They foresee that business responses to the increasing fragmentation of the global economy are expected to include restructuring supply chains (91%), regionalizing operations (90%) and focusing on core markets (79%).
On global trade outlook as countries will be trying to navigate the rising pressures, 48% of the chief economists anticipated an increase in global trade volumes in 2025, underscoring the resilience of global commerce. However, a large majority expect intensifying trade tensions, both between major powers and more widely.
In the face of the pressures, the economists identified protectionism as the primary factor that would drive lasting changes to global trade patterns, with other prominent contributors including conflict, sanctions and national security concerns.
The WEF report indicated that 82% of respondents predicted greater regionalization of trade over the next three years, alongside a continuing gradual shift from goods to services.
