Chief Economists Outlook January 2025

18Chief Economists Outlook 35 Borrett, A. & Strauss, D. (2024). 36 Burn-Murdoch, J. (2024). 37 Cerdeiro, D. et al. (2023). 38 Ibid.Domestic and international policy drivers The global economic landscape continues to fragment, with multiple forces increasing strain on different dimensions of global economic interconnectedness (see Figure 10). This is perhaps most clearly evident in relation to the global trading system, where an intensification of trade-war dynamics is a significant possibility in 2025. There is near-unanimity (94%) among the chief economists surveyed that there will be further fragmentation of goods trade over the next three years, while a smaller majority (59%) expects the same for services trade. The outlook for global trade is covered in more detail in section 4. After goods trade, labour mobility is the next area where fragmentation is most likely, with more than three-quarters of chief economists expecting higher or much higher levels of fragmentation. This expectation occurs against a backdrop where growing political pushback against immigration is coupled with record volumes of immigration. Data released in late 2024 show that legal migration to the 38 member countries of the Organisation for Economic Co-operation and Development (OECD) totalled 6.5 million in 2023, a 10% increase on the previous record in 2022.35 This trend appears to have played a significant role in the global pattern of anti-incumbent voting in the many national elections that took place in 2024, and one analyst suggests that a new “misery index” combining inflation and immigration shows the highest level of socioeconomic upheaval that many countries have seen in generations.36 Almost two-thirds of the chief economists surveyed expect higher fragmentation around transfers of technology and data. National security is playing an increasingly important role in constraining global flows of knowledge and technology, in addition to concerns around data privacy and intellectual property protection.37 Moreover, deepening fragmentation in high-technology sectors threatens to have an outsized economic impact, given that in most countries, these sectors tend to be high- growth and highly trade-intensive.383. Global integration under growing strain