The global economy is set to face significant challenges in 2025, according to the latest World Economic Forum (WEF) Chief Economists Outlook. A survey of top economists reveals a predominantly pessimistic view, with 56% expecting economic conditions to weaken this year. Only 17% foresee an improvement, highlighting the uncertain and fragmented nature of the global recovery.
The four-day WEF annual meeting in Davos-Klosters, Switzerland, kicks off today, with global economic concerns expected to dominate discussions. This year’s report paints a picture of subdued growth prospects, as heightened uncertainty grips key regions worldwide.
U.S. Outlook: A Short-Term Boost with Long-Term Risks
While the global outlook remains cautious, the United States is expected to experience short-term growth, with 44% of economists predicting strong economic expansion in 2025—up significantly from just 15% when the question was posed in August 2024. However, the overall outlook remains less optimistic for other major economies, signaling a divergence in global growth trajectories.
The United States’ potential economic boost is linked to recent policy shifts, particularly the impact of the newly elected president’s policies. Economists predict significant changes in U.S. trade, migration, deregulation, and fiscal policies, which could alter the global economic landscape. Despite the positive short-term outlook, almost all economists expect rising public debt (97%) and higher inflation (94%) in the U.S., reflecting the challenges ahead.
Europe Faces Weak Growth for the Third Consecutive Year
Europe is expected to remain the weakest economic region for the third year in a row, with nearly three-quarters of economists predicting weak or very weak growth. Factors such as sluggish demand and geopolitical uncertainties continue to dampen economic prospects across the continent.
China: Slower Growth Amid Subdued Consumer Demand
China, the world’s second-largest economy, is projected to face a slowdown in 2025, driven by weak consumer demand and declining productivity. The country’s economic momentum is expected to slow further, contributing to the uneven and uncertain global recovery. This mirrors broader concerns about the global economy’s ability to regain full strength in the face of geopolitical and domestic economic challenges.
Global Economic Fragmentation: A Key Theme for 2025
A major theme in the WEF survey is the fragmentation of the global economy. A staggering 94% of economists predict further fragmentation of goods trade in the next three years, with rising barriers to labor mobility (78%) and technology transfers (63%) also expected. This trend reflects the broader shifts in global trade and business dynamics, which are increasingly influenced by domestic policies, security concerns, and shifting international alliances.
The financial sector is an exception, with less than half (48%) of economists expecting increased fragmentation in this area, likely due to the crucial role of cross-border financial flows in modern economies.
Business Adaptations to Global Fragmentation
In response to the increasing fragmentation, businesses are expected to restructure supply chains (91%), regionalize operations (90%), and focus more on core markets (79%). These strategies are likely to reflect the ongoing pressures businesses face as they navigate a more complex and uncertain global landscape.
Despite these challenges, nearly half (48%) of chief economists anticipate global trade volumes will increase in 2025. However, intensifying trade tensions between major powers and other regions will continue to shape the global trade environment, with protectionism cited as the primary driver of lasting changes in global trade patterns. Other significant factors contributing to fragmentation include geopolitical conflicts, sanctions, and national security concerns.
Shifts Toward Regionalization and Services
In addition to trade fragmentation, 82% of economists predict greater regionalization of trade over the next three years, as countries focus on strengthening ties within their own regions. This trend is accompanied by a shift from goods to services in global trade, reflecting changing consumer demands and technological advancements.
As global economic dynamics evolve in 2025, the WEF report underscores the importance of measured and strategic policy responses to navigate the challenges ahead. Economists emphasize that while risks are significant, global trade, particularly in services, is likely to remain resilient, even as geopolitical tensions and protectionist policies reshape the global economy.
The WEF’s Chief Economists Outlook serves as a sobering reminder of the complex economic environment ahead, with uncertainty, fragmentation, and regionalization poised to play significant roles in the global economy over the coming years.
