BENGALURU, April 28 — Risks are high that the global economy will slip into recession this year, according to a majority of economists in a Reuters poll, in which scores said United States (US) President Donald Trump's tariffs have damaged business sentiment.
Just three months ago, the same group of economists covering nearly 50 economies had expected the global economy to grow at a strong, steady clip.
But Trump's push to reshape world trade by imposing tariffs on all US imports has sent shockwaves through financial markets, wiping out trillions of dollars in stock market value, and shaken investors' confidence in US assets, including the dollar, as a safe haven.
While Trump has suspended the heaviest tariffs imposed on almost all trading partners for a few months, a 10 per cent blanket duty remains, as well as a 145 per cent tariff on China, the US' largest trading partner.
"It is hard enough for firms to think about July right now where they do not know what the reciprocal tariffs are. Try and plan another year down the road.
"I mean, who knows what it looks like, let alone five years down the road," said TD Securities' global macro strategy head James Rossiter.
Faced with heightened uncertainties and century-high duties on goods, many global businesses have either withdrawn or cut revenue forecasts.
Showing unusual unanimity, none of the more than 300 economists polled from April 1 to April 28 said tariffs positively impacted business sentiment, with 92 per cent saying 'negative'. Only eight per cent said 'neutral', mostly from India and other emerging economies.
Three-quarters of economists cut their 2025 global growth forecast, bringing the median to 2.7 per cent from 3.0 per cent in a January poll. The International Monetary Fund was a tad higher at 2.8 per cent.
Individual economies surveyed showed a similar trend; median forecasts were cut for 28 of the 48 economies polled.
Among the others, the consensus view was unchanged for 10 economies, and for 10, including Argentina and Spain, the view was slightly upgraded, based mainly on domestic developments.
China and Russia were forecast to grow 4.5 per cent and 1.7 per cent respectively, outperforming the US. Those median estimates were unchanged from last quarter's survey.
However, growth forecasts for Mexico and Canada were downgraded from January by some of the largest margins, to 0.2 per cent and 1.2 per cent. Most of those revisions came in the last month.
The split for 2026 was nearly the same, suggesting the downtrend in growth expectations that started with Trump imposing tariffs is deep and not easy to fix.
Asked about the risk of a global recession this year, 60 per cent — 101 of 167 — said it was high or very high. Sixty-six said it was low, including four who said very low.
"It is a very difficult environment to be optimistic about growth.
"We could get rid of tariffs today and it will still have done quite a lot of damage, just strictly from the view of the US as a reliable actor in bilateral and multilateral agreements ranging from trade to common defense," said State Street's Europe, Middle East, and Africa macro strategy head Timothy Graf.
The progress that central banks have made over the past couple of years in taming the worst global inflation surge in decades by raising interest rates in quick succession is also expected to stall due to tariffs, which economists agree are inflationary.
"Cutting off your largest trading partner ... is going to do all sorts of wild and not so wonderful things to prices, and that is going to have all sorts of negative impacts on real incomes and ultimately demand
"It is a situation where the possibility that we enter a stagflationary environment has always been quite low — but I think is now higher," he added.
Stagflation is usually defined as an extended period of no or low growth, high inflation and rising unemployment.
More than 65 per cent — 19 of 29 major central banks polled — were not expected to meet their inflation targets this year. The number dropped slightly to 15 for next year.
— Reuters
