Chief Economists Caution on Trade Policy Shocks, AI Risks, and Growth

The World Economic Forum's publication, Chief Economists Outlook—May 2025, presents an analysis of global economic prospects, highlighting mounting uncertainty from trade policy shifts and the disruptive potential of artificial intelligence (AI). 

According to the report, 79 percent of surveyed chief economists view current developments—especially changes in US trade policy—as part of a long-term structural shift rather than a temporary disruption. These shifts, notably the introduction of significant US tariffs followed by temporary pauses, have contributed to the highest trade-related uncertainty levels recorded since 1960, surpassing even pandemic-era highs. 

Per the report, 77 percent of chief economists anticipate that heightened tariffs will result in increased inflation, while 89 percent expect stagnating or declining trade volumes. Nearly one-third foresee a broad drag on the global economy, and 87 percent believe businesses will delay strategic decisions in response to the current climate. 

The report also notes significant regional disparities. In the United States, 77 percent of economists anticipate weak or very weak growth for the remainder of 2025, alongside high inflation and a weakening dollar. In contrast, Europe is showing cautious signs of optimism, driven by fiscal policy changes in Germany and continued monetary easing by the European Central Bank. Expectations for China remain uncertain, with economists divided on whether the country will achieve its 5 percent GDP growth target. 

According to the World Economic Forum, geopolitical uncertainty and increased defense spending are straining public finances. Approximately 86 percent of surveyed economists expect governments to finance military budgets through borrowing, raising concerns about debt sustainability in both advanced and developing economies. 

AI is another central theme of the report. While only 45 percent of chief economists expect AI to be commercially disruptive in 2025, 81 percent project that it will contribute a 0–10 percentage point increase in global gross domestic product over the next decade. However, 47 percent foresee net job losses from AI adoption. Key growth drivers include automation, innovation, and workforce augmentation, while risks include misuse for disinformation, market concentration, and business model disruption. 

Per the World Economic Forum, governments are urged to invest in AI infrastructure and talent mobility, while businesses are advised to adapt processes, reskill workers, and bolster cybersecurity. Among surveyed economists, 95 percent emphasized the importance of integrating AI into core business functions, and 91 percent highlighted the need to retrain employees. 

The Chief Economists Outlook is based on a survey conducted in April 2025 by the World Economic Forum's Centre for the New Economy and Society. It reflects the views of public- and private-sector economists on current and emerging macroeconomic developments, with a focus on long-term resilience and inclusive growth.