Global economy deteriorates significantly amid trade shocks and Al disruption, warn chief economists

THE global economic outlook has deteriorated significantly since the start of 2025, driven by volatile trade policies and the disruptive rise of artificial intelligence (AI), according to a World Economic Forum (WEF) report released on Wednesday.

- PHILIPPA LARKIN

The Chief Economists Outlook highlights growing uncertainty, with 79% of surveyed economists viewing current geoeconomic shifts as a structural transformation rather than a fleeting disruption, posing risks to long-term growth and stability.

The report underscores the impact of recent US trade policy shocks, which have shaken confidence in the global economic order. On April 2, the U.S. announced sweeping tariff hikes, including a 10% baseline on most global goods and significantly higher rates targeting countries with trade surpluses, notably China. This triggered market turmoil and retaliatory measures, with China imposing 145% tariffs on US imports and restricting critical mineral exports. Although both nations paused most tariff escalations by May 12, reducing bilateral tariffs by 115 percentage points, the volatility has left lasting uncertainty.