A new report on the global economic outlook has recently been released. The World Economic Forum regularly surveys chief economists, with the current information collected during the first half of April. The findings are worthy of note.

I would like to say that the negative outlook pervading the new report is surprising, but unfortunately it is expected. The survey was conducted during the worst of the tariff turmoil (at least this far), which didn't help matters, and hopefully some participants have become less negative in the hopes that much of the chaos will soon subside. Few lasting trade deals have been struck, however, and, although some levies have been paused, others have been implemented in a somewhat haphazard manner. Uncertainty causes new investments, hiring decisions, product introductions, and even consumer spending to stall until things become clearer, which impedes the path to progress. In fact, the World Bank released a subsequent forecast with the lowest projected expansion since the pandemic and a call to end the trade turmoil.

Other factors negatively affecting the outlook include the multiple lingering wars - Russia-Ukraine and the Middle East - and tension in other areas. These conflicts further contribute to an underlying level of uncertainty, as any significant escalation could disrupt oil markets, shipping, and other crucial economic factors. Amidst these risks, the US tariff blitz hit particularly hard.

Another set of questions concerned AI, which is adding both challenges and potential opportunities. Fewer than half of those surveyed anticipate that AI will be commercially disruptive this year. About 45% expect these new technologies to raise global GDP as much as five percentage points over the coming decade, and a third expect even larger gains. The prospects for job effects are mixed, with more of those surveyed expecting losses than gains due to AI (at least in the early stages of implementation).

The survey responses also delved into the effects of growing national sentiment regarding economic matters, much of which dates back to disruptions occurring during the pandemic. Since that time, numerous countries have seen growing dissatisfaction with a variety of policies ranging from immigration to climate initiatives. As nations begin to follow divergent paths in these and other areas, we may well see less business integration. Working together is the optimal mechanism to ensure prosperity and security, and results are only optimized through international cooperation.

The global economy is facing challenges from many fronts - trade policy, geopolitical tension and war, and sweeping technological change. At this time, the uncertainty associated with tariffs is taking a toll on expectations. However, once we are past this period of turmoil, major new advances should set the stage for stronger performance. Stay safe!