Latest news with #ChiefEconomists
Arabian Business
3 days ago
- Business
- Arabian Business
Global economy set to weaken amid rising uncertainty, WEF economists warn
Chief economists from leading global institutions have unanimously warned that worldwide economic prospects are set to deteriorate considerably for the remainder of 2025, amid 'extraordinary' levels of uncertainty driven by geopolitical tensions and policy volatility, according to a World Economic Forum report released on Thursday. The May 2025 Chief Economists Outlook, based on a survey conducted in early April among top economists, revealed that 82 per cent characterised current uncertainty levels as 'very high' – with nearly half expecting these elevated levels to persist or increase further over the next year. 'The May 2025 edition of the Chief Economists Outlook is published at a time of extraordinary volatility and uncertainty,' the WEF report stated. 'Since the beginning of the year, the global economic outlook has darkened.' Trade policy has emerged as the central driver of economic turbulence, with 97 per cent of surveyed economists identifying it as the area subject to the highest level of uncertainty globally, followed by monetary policy (49 per cent) and fiscal policy (35 per cent). A significant shift in perspective occurred since the previous survey in November 2024, with 79 per cent of chief economists now viewing recent changes to U.S. policy as part of a long-term structural shift rather than a short-term disruption, up from 61 per cent previously. 'Trade-related uncertainty in the past three months has been higher than at any time since records began in 1960,' the report stated, noting that April 2025 levels exceeded even those seen during the COVID-19 pandemic. Among the key concerns highlighted was the impact of rising tariffs, with 77 per cent of respondents expecting higher inflation and 89 per cent anticipating stagnation or decline in global trade volumes for the remainder of 2025. The regional outlook showed marked divergences, with the US economic trajectory showing the most pronounced deterioration. Nearly four out of five chief economists anticipate weak (69 per cent) or very weak (8 per cent) growth for the U.S. economy for the remainder of the year, a significant downgrade from previous expectations of moderate to strong growth. 'According to early official estimates, in the first quarter, real GDP decreased at an annual rate of 0.3 per cent,' the report noted about the U.S. economy. European prospects showed modest signs of improvement, although from a weak base after years of lacklustre growth. Half of the economists still expect growth to remain weak, but increasing fiscal flexibility, particularly in Germany, was cited as a potential driver for broader European growth. In China, while 69 per cent expect moderate growth, economists were split on whether the country would reach its 5 per cent GDP growth target for 2025, with the IMF having recently revised its forecast downward to 4 per cent. Defence spending emerged as a significant economic factor, reflecting growing geopolitical concerns. The survey found that most chief economists expect increased public borrowing (86 per cent) to finance higher military expenditure, while many also anticipate cuts to other public investment (56 per cent) and services (47 per cent). 'Shifts in the global security architecture have caused the steepest year-on-year rise in global military spending since at least the end of the Cold War,' the report said. Despite these challenges, artificial intelligence offers a potential bright spot. While only 45 per cent of chief economists expect AI to become commercially disruptive this year, a significant proportion (46 per cent) anticipate it will add up to five percentage points to global GDP over the next decade, with another 35 per cent expecting gains of 5-10 percentage points. The labour market impact of AI remains uncertain, with 47 per cent of economists forecasting net job losses over the next decade, compared to 19 per cent who predict net job gains. In response to these complex challenges, businesses are adapting rapidly. All surveyed economists (100 per cent) expect companies to reorganise sourcing and logistics to reduce exposure to tariffs or export controls, while 87 per cent anticipate businesses will delay strategic decisions and investments due to heightened uncertainty. 'At a time of profound disruption, organizations can position themselves for resilience and expansion by aligning technological innovation with a clear understanding of the broader economic landscape,' the report concluded. The survey, conducted between April 3-17, captured economists' views during a period of particularly acute trade uncertainty before several major powers announced temporary pauses to planned tariff increases in May.
Economy ME
5 days ago
- Business
- Economy ME
Global uncertainty exceptionally high as chief economists concerned about trade shocks, AI disruption: WEF
The global economic outlook has deteriorated since the beginning of the year, as rising economic nationalism and tariff volatility contribute to uncertainty and threaten to stall long-term decision-making, according to a recent report from the World Economic Forum (WEF) . The latest Chief Economists Outlook reveals that a substantial majority (79 percent) of surveyed economists interpret the current geoeconomic developments as indications of a significant structural shift in the global economy rather than as a temporary disruption. 'Policymakers and business leaders must respond to heightened uncertainty and trade tensions with greater coordination, strategic agility, and investment in the growth potential of transformative technologies like artificial intelligence,' stated Saadia Zahidi, managing director of the World Economic Forum. 'These steps are essential for navigating today's economic headwinds and securing long-term resilience and growth.' High levels of global uncertainty Global uncertainty is considered exceptionally high by 82 percent of chief economists. While a slim majority (56 percent) anticipate conditions to improve over the next year, concerns remain prevalent. Nearly all chief economists (97 percent) identify trade policy as one of the areas of highest uncertainty, followed by monetary policy (49 percent) and fiscal policy (35 percent). This uncertainty is expected to adversely affect key economic indicators, including trade volumes (70 percent), GDP growth (68 percent), and foreign direct investment (62 percent). Most chief economists (87 percent) predict that businesses will react to uncertainty by postponing strategic decisions, which increases recession risks. Debt sustainability is also a growing concern, cited by 74 percent of respondents for both advanced and developing economies. An overwhelming majority (86 percent) expect governments to address rising defense spending needs through increased borrowing, potentially crowding out investments in public services and infrastructure. In early April, during the height of uncertainty, most chief economists (77 percent) anticipated weak or very weak growth through 2025 in the U.S., along with high inflation (79 percent) and a weakening dollar (76 percent). In contrast, they expressed cautious optimism regarding Europe's prospects for the first time in years, primarily due to expectations of fiscal expansion, particularly in Germany. The outlook for China remains subdued, with chief economists divided on whether it will achieve its target of 5 percent GDP growth this year. Optimism is strongest for South Asia, where 33 percent expect robust or very robust growth this year. Read more: Global economy to strengthen this year, but growth uneven: World Economic Forum report AI's economic impact Artificial intelligence is set to drive the next wave of economic transformation, unlocking considerable growth potential but also introducing significant risks. Nearly half (46 percent) of chief economists anticipate AI will provide a modest global real GDP boost of 0-5 percentage points over the next decade, while an additional 35 percent project gains of 5-10 percentage points. Key growth drivers include task automation (68 percent), accelerated innovation (62 percent), and worker augmentation (49 percent). Despite the potential, concerns remain: 47 percent expect net job losses over the next decade, compared to just 19 percent who foresee gains. Above all, respondents emphasized the misuse of AI for disinformation and societal destabilization as the primary risk to the economy (53 percent). Other significant risks include the rising concentration of market power (47 percent) and the disruption of existing business models (44 percent). To fully capitalize on AI's potential, chief economists underscored the necessity for bold action from both governments and businesses. For governments, top priorities include investing in AI infrastructure (89 percent), promoting adoption across key industries (86 percent), facilitating AI talent mobility (80 percent), and investing in upskilling and redeployment (75 percent). For businesses, the focus is on adapting core processes to integrate AI (95 percent), reskilling employees (91 percent), and training leadership to guide AI-driven transformation (83 percent).
