THE global economic outlook is increasingly fractured and facing considerable pressure, according to the World Economic Forum (WEF), though artificial intelligence (AI) is forecast to be a major driver of growth in the years ahead.
In its newly released entitled ‘Chief Economists Outlook’, the WEF warned that rising economic nationalism and volatile tariffs are deepening uncertainty and hampering long-term decision-making across major economies.
“The global economic outlook has worsened since the start of the year,” the WEF stated, noting a divergence in regional performance — with weak prospects in North America, cautious optimism in Europe, and resilience in the Asia-Pacific region.
A substantial majority of surveyed economists (79 per cent) believe current geopolitical and economic developments reflect a fundamental structural shift, not merely a temporary disruption.
WEF Managing Director Saadia Zahidi called for “greater coordination, strategic agility, and investment in transformative technologies such as AI” to manage the economic headwinds and secure future resilience.
The report highlighted that 82 per cent of chief economists view global uncertainty as exceptionally high. Trade policy was cited by 97 per cent as the most unpredictable factor, followed by monetary policy (49 per cent) and fiscal policy (35 per cent).
This uncertainty is already impacting core economic indicators, with 70 per cent expecting global trade volumes to decline, 68 per cent forecasting weaker GDP growth, and 62 per cent anticipating reduced foreign direct investment.
Debt sustainability has emerged as a growing concern, with 74 per cent warning of rising risks in both developed and developing economies. Additionally, 86 per cent of economists expect governments to expand borrowing to fund increasing defence budgets, potentially at the expense of public services and infrastructure.
Despite the headwinds, the report underscores AI’s potential to drive the next phase of economic transformation. Nearly half of the chief economists surveyed (46 per cent) anticipate a modest GDP uplift of up to five percentage points over the next decade from AI, while 35 per cent foresee gains of five to ten points.
Key areas of impact include task automation (68 per cent), faster innovation (62 per cent), and worker augmentation (49 per cent). However, concerns persist: 47 per cent expect AI to lead to net job losses, while only 19 per cent predict net employment gains.
AI misuse — particularly in disinformation and societal destabilisation — topped the list of economic risks identified by respondents (53 per cent), alongside increasing market concentration (47 per cent) and the disruption of established business models (44 per cent).
To realise AI’s benefits, economists urged governments to prioritise infrastructure investment (89 per cent), industry-wide adoption (86 per cent), talent mobility (80 per cent), and workforce upskilling (75 per cent). Businesses, meanwhile, should focus on AI integration into core operations (95 per cent), employee reskilling (91 per cent), and leadership readiness (83 per cent). - May 28, 2025
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