Cairo: Hani Kamal El-Din
A recent survey of over 300 economists conducted by Reuters has sounded the alarm on the global economic outlook, warning of an increasing likelihood of a global recession in the near future. The majority of respondents indicated that U.S. President Donald Trump’s trade policies, particularly his decision to impose tariffs on a wide range of imports, have been a significant destabilizing force, contributing to a dramatic shift in global economic sentiment.
Just a few months ago, the same group of economists, representing nearly 50 countries, had projected a robust and steady global economic growth trajectory. However, the introduction of sweeping tariffs aimed at reshaping global trade dynamics has resulted in a shock to financial markets, erasing trillions of dollars in stock market value and undermining investor confidence in U.S. assets, including the U.S. dollar, which had long been regarded as a safe haven.
Although President Trump temporarily suspended some of the most severe tariffs that had been applied to key trading partners, certain tariffs remain in place, including a 10% duty on various goods and a 145% tariff on Chinese imports—the U.S.’s largest trading partner.
James Rossiter, Head of Global Macro Strategy at TD Securities, highlighted the uncertainty companies are grappling with, stating, “It’s hard for businesses to make plans for July when they don’t know what the retaliatory tariffs will be. Trying to forecast a year ahead is even more challenging. Who knows what the future holds, let alone five years from now?”
This heightened uncertainty and the unprecedented nature of the tariffs have prompted many companies worldwide to either withdraw or drastically revise their revenue forecasts for the coming periods.
What stands out from the Reuters survey is the unanimous sentiment among economists—none of the more than 300 respondents, surveyed between April 1 and 28, expressed a positive outlook regarding the impact of tariffs on business confidence. A staggering 92% of the economists surveyed indicated that tariffs have had a negative impact, while only 8% cited a neutral effect, primarily from economists in emerging markets like India.
As a result, three-quarters of economists lowered their global growth forecasts for 2025, bringing the median estimate down from 3.0% to 2.7%. The International Monetary Fund (IMF) offered a slightly more optimistic outlook, predicting a growth rate of 2.8%.
Interestingly, forecasts for China’s and Russia’s economic growth were revised upward to 4.5% and 1.7%, respectively—outpacing U.S. projections. These estimates were unchanged from the previous quarter’s survey. However, projections for Mexico and Canada were revised significantly downward from January, with the growth rates now expected to be just 0.2% and 1.2%, respectively. Most of these revisions occurred in the past month, underlining the extent of the shifts in the economic environment.
The division of opinions regarding the economic outlook for 2026 is similarly stark, underscoring the deep-rooted concerns caused by the ongoing trade disputes, which show no signs of abating soon.
Regarding the likelihood of a global recession this year, 60% of survey respondents expressed a high or very high level of concern. In contrast, only 66 respondents (approximately 22%) considered the risk to be low, with just four categorizing it as “very low.”
Timothy Graf, Head of Macro Strategy for Europe, the Middle East, and Africa at State Street, emphasized the difficulty of maintaining an optimistic outlook under these conditions, saying, “We could remove the tariffs today, and it would still cause significant damage, not just in terms of the U.S. as a reliable partner in bilateral and multilateral agreements, but across global trade and security alliances.”
The challenges posed by tariffs extend beyond the immediate economic disruptions. The actions taken by the U.S. could derail progress made by central banks in curbing inflation, which has surged to levels not seen in decades. Many economists now believe the tariffs are inflationary, further complicating efforts to stabilize global prices.
“The withdrawal from the largest trading partner has profound implications for prices, leading to a wide range of negative consequences for real income and, ultimately, demand,” Graf added. “There’s always been a low probability of entering a stagflationary environment, but I think the risk is now much higher.”
Stagflation, characterized by prolonged periods of low or no growth, high inflation, and rising unemployment, now appears to be a more plausible scenario than it did in the past.
Moreover, over 65% of the surveyed central banks, specifically 19 out of 29, do not expect to meet their inflation targets this year. Furthermore, 15 out of 29 central banks do not foresee achieving their inflation targets even by 2026, suggesting a prolonged period of inflationary pressures despite efforts to tighten monetary policies.
