Global economists issue alarming predictions of potential worldwide economic downturn as a result of Trump's tariffs
Venturing into a Global Recession: The Unsettling Forecast
The looming specter of a global economic downturn this year looks increasingly likely, as per the insights of the majority of economists worldwide, as reported by Reuters. A staggering 60% of these experts (representing 101 out of 167) flagged the risk of a global recession in 2025 as high or extremely high. Conversely, only 62 economists anticipate a low risk, and merely four view it as very low.
Just a mere three months ago, these same economists from around 50 nations painted a rosy picture of sustained, robust growth in the global economy. However, the ardent push by President Donald Trump to levy tariffs on all U.S. imports has led to a noticeable decline in business confidence, causing many multinational corporations to either pull back or trim their earnings projections. According to Reuters, this downturn in sentiment has been mainly driven by Trump's tariff measures.
Not a single one of the 300 economists surveyed between April 1 and 28 viewed tariffs as a positive factor for business sentiment. An alarming 92% rated them as negative, while just 8% (mostly from India and developing economies) considered them neutral.
As a result, 75% of these economists have scaled back their forecast for the global GDP growth in 2025 to 2.7% from 3.0% in the initial January survey, which aligns with the IMF's projected economic growth of 2.8%. In the same January survey, the median GDP growth forecasts were lowered for 28 out of 48 countries. The economies of Mexico and Canada are projected to expand by 0.2% and 1.2%, respectively.
In contrast, the consensus forecasts remain unchanged for 10 countries, such as China and Russia, whose economies are predicted to grow by 4.5% and 1.7%, respectively, surpassing the anticipated growth of the U.S. Another 10 countries, including Argentina and Spain, exhibit a slightly improved forecast, largely due to internal developments.
"The current climate is not one to foster optimism about growth" commented Tim Graf, head of macro strategy for Europe, the Middle East, and Africa at State Street. Graf drew attention to the adverse consequences that Trump's tariffs could have on prices, negatively affecting real incomes and demand, potentially leading to an environment of stagflation. He noted that while the likelihood of us entering a stagflationary phase was previously low, it has markedly increased.
Stagflation signifies prolonged economic stagnation accompanied by high inflation and rising unemployment.
Trump first unveiled the introduction of "retaliatory" tariffs on over 180 countries and the EU at the start of April. Subsequently, he paused the tariffs, remarking that multiple states had expressed an interest in engaging in talks regarding the matter.
- The economists' outlook for the global economy in 2025, as reported by Reuters, now shows a high risk of a recession, with 60% of experts deeming it as high or extremely high.
- The ardent push by President Donald Trump to institute tariffs on all US imports has contributed negatively to business confidence, causing multinational corporations to either pull back or trim their earnings projections.
- In the April survey, not a single economist viewed tariffs as a positive factor for business sentiment, with 92% rating them as negative.
- As a result of these factors, the economists have scaled back their forecast for the global GDP growth in 2025 to 2.7%, from the initial 3.0% in the January survey.
- Economist Tim Graf commenting on the current climate stated that the adverse consequences of Trump's tariffs could lead to an environment of stagflation, a condition characterized by prolonged economic stagnation, high inflation, and rising unemployment.
