Chief Economists Outlook May 2025

25Chief Economists Outlook Stalled decision-making In the face of escalating geopolitical and economic uncertainty, businesses tend to adapt to mitigate risks and capitalize on any emerging opportunities. The most likely response, highlighted by 100% of the chief economists surveyed, involves reorganizing sourcing and logistics to reduce exposure to tariffs or export controls over the next three years. There is already evidence of firms diversifying trade networks across multiple regions in an effort to reduce risk.59 This approach aims to safeguard against sudden policy shifts and enhance resilience by reducing dependency on any single market or supplier. Figure 25. Business adjustments to uncertainty Looking at the next three years, how do you expect multinational companies to adjust their strategies in response to heightened economic uncertainty? Reorganize sourcing and logistics to reduce exposure to tariffs or export controls Delay strategic decisions and investments Shift production and investment to reduce exposure to tariffs or export controls Align operations with new geopolitically driven opportunities in specific sectors and geographies Reduce exposure to geopolitically high-risk markets Increase policy monitoring and political engagement in key markets Increase organizational capacity and agility Increase strategic and organizational diversification Share of respondents (%)Highly unlikely Unlikely Neither likely nor unlikely Likely Highly likely 68 8 5 3 3 8 8 11 28 56 630 54 816 41 3513 68 1613 66 1811 63 215 42 4532 Source: Chief Economists Survey. (2025, April). While the direct impact of new tariffs and other policy measures is significant, the pervasive uncertainty surrounding them and their second-order effects is economically damaging in its own right: as uncertainty rises, firms tend to slow hiring and investment, while consumers tend to delay spending decisions.60 This is evident in the responses of the chief economists, with 87% expecting businesses to delay strategic decisions and investments in response to heightened economic uncertainty. This is a significant change from the previous survey, in which a wait-and-see strategy was still largely ruled out as a likely response to global economic fragmentation. Such delayed decision-making heightens the risk of a global recession. 59 United Nations Trade and Development (UNCTAD). (2025c). 60 Ahir, H. et al. (2020).