When the foundations shift and the outlook darkens

That's how one economist characterizes the forces transforming the global economy as we near the midpoint of 2025.

While uncertainty is a given in economics, this phrase captures how the stakes have ratcheted up, with politicians and policymakers changing the rules of the game. US trade tariffs, shifting global alliances and technological disruptions are all contributing to a fundamental reshaping of the landscape that’s detrimental to the economy, according to the World Economic Forum’s latest survey of chief economists.

“We've come to learn about new layers in uncertainty,” says Sandra Phlippen, Chief Economist at ABN AMRO Bank and endowed professor of Sustainable Banking at the University of Groningen. “We have uncertainty in the economic fundamentals and what we're now seeing is even uncertainty in the, what I call the 'superfundamentals'. Uncertainty, about the legal system, about democracy, about so many fundamental things.”

Phlippen was one of three leading economists who sat down with Saadia Zahidi, the Forum’s Managing Director, Centre for the New Economy and Society and Knowledge Communities, to discuss how we can navigate this era of uncertainty and what a new economic future might look like. Guy Miller, Chief Market Strategist and Economist at Zurich Insurance and Jinny Yan, Managing Director, Chief China Economist, China Markets Strategy, Global Markets Fixed Income, Currencies, and Equities, ICBC Standard Bank, also shared their points of view in a wide-ranging discussion.

Volatility weighs on the outlook

Dramatic changes to US policy, enacted by President Donald Trump, represent part of a long-term structural shift rather than a short-term disruption, according to 79% of chief economists surveyed, a marked increase from 61% in late 2024. All respondents said they believe the future condition of the global economy will be weaker, a marked deterioration from November’s report, and a significant drop from the survey a year ago, when 41% said they saw a “somewhat stronger” future.

“It's the erratic nature, the start-stop nature” of what’s happening, says Zurich’s Guy Miller, “If you're a company, should I invest today? Should I wait until tomorrow? Do I wait to have more clarity? And you see that from a consumer's perspective as well. So whether it's business investment or whether it is consumption, right now there's a let's wait and see, and of course that wait and see means that growth will be impacted ultimately as a result.”

The majority of chief economist respondents expect weak or very weak growth in the US for the remainder of 2025, alongside rising inflation and a weakening dollar. In Europe, emerging signs of improvement have been seen, as well as in China.

Even so, the US government’s tariffs, aimed at protecting domestic industries and reducing trade deficits, have triggered retaliatory measures from many key trading partners and have disrupted global supply chains.

While some tensions have eased since the economists were surveyed in April, the overarching themes are clear. They discussed how the baseline for traditional economic uncertainty has expanded to include legal, democratic and institutional realms, making it even harder to predict what’s coming.

Seismic shocks abound

“The seismic shocks are coming from everywhere, not just tariffs,” says Jinny Yan from ICCB Standard. “I would argue that a lot of the uncertainty is coming both from structural, as well as the short-term policy decisions.”

Uncertainty remains very high, according to 82% of those surveyed, and just 56% think that it's going to be lower a year from now.

“The key word through all of this is uncertainty,” says Saadia Zahidi. “With swings, U-turns, reversals, keeping everyone, especially those of us who watch the global economy for a living, on our toes.”

Trade and tariffs are a key focus, with 77% of the economists surveyed saying higher tariffs will lead to higher inflation, and 89% predicting that they will lead to a stagnation or decline for global trade.

“For me, diversification, domestic capacity and also de-risking are the three Ds,” says Jinny Yan. “That really exemplifies and also demonstrates how nations are going to be able to become more resilient to short-term shocks from tariff wars.”

Business decision-making stalls

Businesses and governments are being forced to adapt to this surge in economic volatility at the same time they are adapting to rapid technological transformation. All of the chief economists surveyed expect firms to reorganize sourcing and logistics to reduce tariff exposure, while a large majority anticipate delays in decision-making and investment.

“Companies need clarity to invest for future growth,” says Guy Miller, “That's where I think, when we speak about tariffs, it's not so much the tariffs themselves, because I think structural change, individuals, companies, governments can adapt to. What I think is very hard to adapt to is that uncertainty.”

The economists discussed some opportunities in supply chain diversification and regional expansion, but underscored the challenges in achieving this. The rapid acceleration of AI is another source of volatility and of disruption.

“Business decisions aren't just as simple as they used to be,” says Jinny Yan.

The conversation also included potential positives. For example, the global economy becoming less dependent on the US and a diversification of demand to other parts of the world. The economists considered whether the current situation might push countries and regions towards greater self-reliance, helping to balance global demand.

“I look into 2026, I think there is, at the margin, some improvement coming through,” says Guy Miller. “The US is likely by that time to do a little bit better as well. I think Europe can do better, clearly parts of Asia will do notably better and it's important that, while there is an impact from tariffs and inflation, particularly in America in the short- to medium-term, global interest rates are coming down and we think they will continue to come down. That does lend some support to growth, so I think it can get better.”