These Are Challenges That Will Be Faced By The Global Economy In 2025

Indonesian economy (Photo: Antara)

JAKARTA - The global economy is expected to face significant challenges by 2025.

In a recent survey by Chief Economist Outlook of the World Economic Forum (WEF) as many as 56 percent of economists' heads are surveyed predicting conditions will weaken and only 17 percent predict improvements, this shows increased uncertainty in key areas and the need for measurable policy responses around the world.

While the United States is projected to get a boost for the short term with 44 percent of economists predicting strong growth by 2025, up from 15 percent when asked in August last year regarding economic prospects for the coming year remains less optimistic for other major economies.

Meanwhile, Europe continues to rank as the weakest region for three consecutive years, with nearly three-quarters or 74 percent forecasting weak or very weak growth.

Meanwhile, China's economic momentum is projected to slow down amid weak consumer demand and weaker productivity, which further illustrates the uneven and uncertain nature of global recovery.

"The latest Chief Economist Outlook shows that the global economy is experiencing considerable pressure," said Head of Growth An Economic Transformation, World Economic Forum, Aengus Collins in his statement, Friday, January 17.

He said that the prospect of growth was at its weakest point in decades and political developments both at home and internationally highlighted how controversial economic policies had become.

In this environment, growing the spirit of collaboration will require more commitment and creativity than ever before.

In addition, the new report underscores the importance of the recent US presidential election, with 61 percent of economists classifying its impact on the global economy as a long-term shift, not a short-term disruption. Major changes are expected in areas such as trade, migration, deregulation, fiscal policy, and industrial policy.

The solid outlook of chief economists on US growth by 2025 is in line with their expectations of short-term stimulus and wage increases. However, they remain wary of risks, with almost all of them forecasting a higher increase in the level of public debt (97 percent) and inflation (94 percent).

In addition to the sluggish global growth prospects, the Prospect of the Head of the Economist revealed an increasing pressure on world economic relations. Most respondents (94 percent) predicted further fragmentation in the trade of goods over the next three years, while 59 percent predicted the trade in services would follow the same path.

More than three-quarters also estimate higher barriers to labor mobility, while nearly two-thirds show increased constraints on technology and data transfer.

The financial sector stands out as an exception, with less than half (48 percent) forecasting an increase in fragmentation, which may reflect the important role of cross-border financial flows in modern economies.

Nonetheless, domestic and international political developments, restructuring supply chains, and security issues appear to be large. This shift is likely to drive an increase in costs for businesses and consumers over the next three years.

The business response to the increasing fragmentation of the global economy is expected to include supply chain restructuring (91 percent), operational regionalization (90 percent) and focus on the core market (79 percent).