The global economy faces a challenging 2025, with a majority of leading economists anticipating weaker conditions.
Only 17 per cent of chief economists surveyed by the World Economic Forum expect an improvement, compared to 56pc who foresee a downturn. This stark outlook reflects heightened uncertainty across key regions and underscores the need for carefully calibrated policy responses.
While the US economy may experience a short-term boost, driven by recent policy shifts, concerns over rising debt and inflation temper optimism. Europe, meanwhile, continues to grapple with weak growth, marking the third consecutive year of subdued economic activity. China’s economy is also projected to slow, further highlighting the uneven and uncertain nature of any global recovery.
“This latest outlook reveals a global economy under significant strain,” said Aengus Collins, head of economic growth and transformation at the World Economic Forum. “Growth prospects are at their weakest in decades, and political developments, both domestically and internationally, have made economic policy highly contested. In this environment, fostering collaboration will require greater commitment and creativity than ever before.”
The report emphasises the long-term implications of the recent US presidential election, with 61pc of economists characterising its impact on the global economy as a fundamental shift rather than a short-term disruption. Key areas of anticipated change include trade, migration, deregulation, fiscal policy, and industrial policy. While the near-term outlook for US growth appears positive, driven by expected stimulus and rising wages, concerns over mounting public debt and inflation remain significant.
The report highlights intensifying pressures on global economic interconnectedness. A vast majority of respondents (94pc) predict further fragmentation of goods trade over the next three years, while a significant portion (59pc) expect a similar trend in services trade. Barriers to labor mobility are also expected to rise, and constraints on technology and data transfers are anticipated by nearly two-thirds of respondents.
While the financial sector may experience less fragmentation, driven by the crucial role of cross-border financial flows, the report underscores the significant impact of domestic and international political developments, supply-chain realignments, and security concerns on global economic integration. These shifts are likely to increase costs for businesses and consumers worldwide.
Despite these challenges, nearly half (48pc) of chief economists anticipate an increase in global trade volumes in 2025, highlighting the resilience of global commerce. However, a large majority expect intensifying trade tensions, both between major powers and more broadly. Protectionism is identified as the primary driver of lasting changes to global trade patterns, with other contributing factors including conflict, sanctions, and national security concerns.
avinash@gdnmedia.bh
Follow us on LinkedIn - Gulf Daily News - GDN
&uuid=(email))