WEF releases Chief Economists’ outlook for May
The World Economic Forum’s May 2025 Chief Economists Outlook presents a comprehensive analysis of the global economic landscape.
Furthermore, it underscores an unprecedented level of global economic uncertainty. A significant 82% of surveyed chief economists perceive the current uncertainty as “very high,” with 21% anticipating even greater uncertainty in the coming year. This pervasive unpredictability is attributed to factors such as shifting trade policies, geopolitical tensions, and rapid technological advancements.
• The United States faces a challenging economic outlook, with 77% of chief economists predicting weak or very weak growth for the remainder of 2025. Contributing factors include rising inflation, a weakening dollar, and policy-induced uncertainties.
• Europe exhibits cautious optimism, buoyed by expansionary fiscal policies, particularly in Germany. However, challenges persist due to trade tensions and structural economic issues.
• Asia-Pacific: The region demonstrates resilience, with India poised to be a primary engine of global economic growth in 2025 and 2026. India’s robust domestic demand, demographic advantages, and digital infrastructure contribute to this positive outlook.
• China’s growth prospects are mixed, with economists divided on its ability to achieve a 5% GDP growth target amid external and domestic challenges.
Trade policies have become central to economic uncertainty. The US’s imposition of tariffs and subsequent retaliatory measures have disrupted global supply chains. Although a temporary pause on some tariffs has provided short-term relief, long-term concerns persist. Notably, 97% of chief economists identify trade policy as a primary source of uncertainty, followed by monetary and fiscal policies.
Artificial Intelligence (AI) is recognised as a transformative force in the global economy. While AI offers potential for increased productivity and economic growth, it also presents challenges, including workforce displacement and ethical considerations. The report emphasises the need for strategic integration of AI, workforce reskilling, and robust regulatory frameworks to harness its benefits while mitigating risks.
Strategic business responses
In response to the volatile economic environment, businesses are adopting various strategies:
• Supply chain diversification: Companies are reorganising sourcing and logistics to reduce tariff exposure and enhance resilience.
• Investment delays: A significant majority (87%) of businesses are postponing strategic decisions, reflecting caution amid uncertainty.
• Workforce reskilling: Organisations are investing in reskilling initiatives to adapt to technological advancements and changing job requirements.
The report advocates for coordinated policy responses to navigate the current economic challenges:
• Enhanced multilateral cooperation: Strengthening international collaboration is essential to address global issues such as climate change, health security, and economic inequality.
• Predictable economic policies: Establishing stable and transparent trade, monetary, and fiscal policies can reduce uncertainty and foster investor confidence.
• Investment in human capital: Prioritising education and skill development will equip the workforce to thrive in an AI-driven economy.
Outlook for 2025 and beyond
The global economic outlook for 2025 is characterised by significant challenges and opportunities.
The global economy is expected to experience its weakest growth since 2008, excluding the pandemic period. While North America faces subdued growth, Asia-Pacific, particularly India, is anticipated to drive global economic expansion. Finally, the ongoing AI revolution presents both opportunities for innovation and challenges related to employment and regulation.
Furthermore, it underscores an unprecedented level of global economic uncertainty. A significant 82% of surveyed chief economists perceive the current uncertainty as “very high,” with 21% anticipating even greater uncertainty in the coming year. This pervasive unpredictability is attributed to factors such as shifting trade policies, geopolitical tensions, and rapid technological advancements.
• The United States faces a challenging economic outlook, with 77% of chief economists predicting weak or very weak growth for the remainder of 2025. Contributing factors include rising inflation, a weakening dollar, and policy-induced uncertainties.
• Europe exhibits cautious optimism, buoyed by expansionary fiscal policies, particularly in Germany. However, challenges persist due to trade tensions and structural economic issues.
• Asia-Pacific: The region demonstrates resilience, with India poised to be a primary engine of global economic growth in 2025 and 2026. India’s robust domestic demand, demographic advantages, and digital infrastructure contribute to this positive outlook.
• China’s growth prospects are mixed, with economists divided on its ability to achieve a 5% GDP growth target amid external and domestic challenges.
Trade policies have become central to economic uncertainty. The US’s imposition of tariffs and subsequent retaliatory measures have disrupted global supply chains. Although a temporary pause on some tariffs has provided short-term relief, long-term concerns persist. Notably, 97% of chief economists identify trade policy as a primary source of uncertainty, followed by monetary and fiscal policies.
Artificial Intelligence (AI) is recognised as a transformative force in the global economy. While AI offers potential for increased productivity and economic growth, it also presents challenges, including workforce displacement and ethical considerations. The report emphasises the need for strategic integration of AI, workforce reskilling, and robust regulatory frameworks to harness its benefits while mitigating risks.
Strategic business responses
In response to the volatile economic environment, businesses are adopting various strategies:
• Supply chain diversification: Companies are reorganising sourcing and logistics to reduce tariff exposure and enhance resilience.
• Investment delays: A significant majority (87%) of businesses are postponing strategic decisions, reflecting caution amid uncertainty.
• Workforce reskilling: Organisations are investing in reskilling initiatives to adapt to technological advancements and changing job requirements.
The report advocates for coordinated policy responses to navigate the current economic challenges:
• Enhanced multilateral cooperation: Strengthening international collaboration is essential to address global issues such as climate change, health security, and economic inequality.
• Predictable economic policies: Establishing stable and transparent trade, monetary, and fiscal policies can reduce uncertainty and foster investor confidence.
• Investment in human capital: Prioritising education and skill development will equip the workforce to thrive in an AI-driven economy.
Outlook for 2025 and beyond
The global economic outlook for 2025 is characterised by significant challenges and opportunities.
The global economy is expected to experience its weakest growth since 2008, excluding the pandemic period. While North America faces subdued growth, Asia-Pacific, particularly India, is anticipated to drive global economic expansion. Finally, the ongoing AI revolution presents both opportunities for innovation and challenges related to employment and regulation.
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