A majority of economists believe US trade policy will have a “lasting impact” on the global economy.
That’s according to the World Economic Forum’s latest survey of chief economists.
The snapshot of opinion recorded in early April just after US President Donald Trump’s Liberation Day tariff announcement found most economists (77 per cent) were anticipating “weak or very weak growth” through 2025 in the US, alongside high inflation and a weakening dollar.
“By contrast, they were cautiously optimistic about Europe’s prospects for the first time in years, mainly because of expectations of fiscal expansion, notably in Germany,” the report noted.
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The outlook for China remains muted with chief economists divided over whether the Asian powerhouse will reach its target of 5 per cent GDP (gross domestic product) growth this year.
Overall economists see Washington’s protectionist pivot and on-off tariff threats as delaying strategic business decisions and increasing recession risks, the report said.
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A strong majority (79 per cent) said they viewed current geoeconomic developments “as signs of a significant structural shift for the global economy rather than a temporary disruption.”
Nearly all the chief economists (97 per cent) flagged trade policy among the areas of highest uncertainty, followed by monetary policy (49 per cent) and fiscal policy (35 per cent).
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A majority (87 per cent) anticipate that businesses will respond to this uncertainty by delaying investment.
Debt sustainability was also pinpointed as a concern, cited by 74 per cent of respondents for both advanced and developing economies.
An overwhelming majority (86 per cent) said they expected governments to meet rising defence spending needs through increased borrowing, potentially crowding out investment in public services and infrastructure.
Artificial intelligence is expected to drive growth, but 47 per cent of economists anticipate it will result in “net job losses”.
“Policymakers and business leaders must respond to heightened uncertainty and trade tensions with greater co-ordination, strategic agility and investment in the growth potential of transformative technologies like artificial intelligence,” said Saadia Zahidi, managing director, World Economic Forum.
“These steps are essential for navigating today’s economic headwinds and securing long-term resilience and growth,” she said.
