Economists Warn Trade Policy Uncertainty Drags Global Growth

Geneva, Switzerland - Trade policy uncertainty has emerged as the primary concern weighing on global economic prospects, according to a World Economic Forum survey, which found that 97% of chief economists identify it as a major source of risk.

The survey of economists from the public and private sectors, conducted in early April, revealed widespread pessimism about near-term growth and heightened concerns about policy volatility.

Of those surveyed, 82% characterized current global uncertainty as exceptionally high.

Nearly eight in ten economists surveyed said current developments represent a structural shift in the global economy rather than a temporary disruption.

The World Economic Forum released its findings on Wednesday as part of the Chief Economists' Outlook report.

Business investment decisions face delays as companies respond to policy uncertainty, according to 87% of survey respondents.

This trend could increase recession risks, the economists indicated.

Regional growth expectations show sharp divisions. In the United States, 77% of economists surveyed in early April expected weak growth through 2025, while 79% anticipated high inflation and 76% projected dollar weakness.

European growth prospects improved compared to previous surveys, driven by expectations of fiscal expansion in Germany and other countries.

China's economic outlook remained mixed, with economists divided on whether the country will achieve its official 5% growth target this year.

South Asian economies received the most optimistic assessments, with one-third of respondents projecting strong growth for 2025.

Debt sustainability concerns affect both developed and developing nations, according to 74% of economists surveyed. 

Defense spending increases will likely require additional government borrowing, according to 86% of respondents, which could potentially limit resources for other public investments.

Artificial intelligence presents both opportunities and risks in economic projections.

Nearly half of economists expect AI to add between zero and five percentage points to global GDP over the next decade, while 35% project larger gains of five to ten points.

Job displacement concerns accompany AI optimism.

The survey found that 47% of economists expect net job losses from artificial intelligence over ten years, compared to 19% who anticipate job creation.

AI risks center on potential misuse for disinformation, cited by 53% of respondents as the top economic concern.

Market concentration and business model disruption also ranked among primary risks.

The World Economic Forum's Centre for the New Economy and Society surveyed its members, building on consultations with economists across various sectors.