Chief Economists Outlook September 2025

Political instability and societal fragmentation Weak or inflexible institutions and governance Trade barriers and limited global integration Structural economic weaknesses (e.g. low productivity/informality) Fiscal vulnerabilities (including debt servicing costs) Armed conflict and insecurity Job disruptions and skills gaps Infrastructure and digital gaps Barriers to finance and investment Weak innovation and entrepreneurship ecosystems Environmental/health/climate risksDeveloping economies Advanced economiesFigure 22 : Growth inhibitors Looking at the next three years, which factors are most likely to inhibit growth and development progress? (Select the top three) 48 68 58 44 36 56 36 24 12 41 36 15 24 12 21 12 21 9 3 12 3 6 Share of respondents (%) Note: Development factors are sorted by share of total responses. The rarely used option “Other (please specify)” was excluded. Source: Chief Economists Survey. (August 2025). Chief economists were also asked to identify inhibitors with the potential to limit growth. Political instability and societal fragmentation emerged as the most frequently cited obstacles across both advanced and developing countries. Political instability tends to slow growth by weighing on productivity growth and, to a lesser extent, the accumulation of physical and human capital.112 Recent developments in France, where legislative deadlock has driven bond yields sharply higher, illustrate the direct economic costs.113 Sixty-eight percent of respondents see this as a greater threat for advanced economies than for developing economies (48%). Weak or inflexible institutions and governance ranks as the second most significant inhibitor. The link between institutional quality and long-term growth – highlighted by the 2024 Nobel Prize in Economics – is a cornerstone of development economics.114 Fifty-eight percent of respondents see it as the top constraint for developing economies, which continue to score much lower than advanced economies on governance indicators.115 Despite this, 44% of chief economists surveyed also see institutional rigidity as a barrier in advanced economies, where regulatory complexity is regularly cited by small- and medium- sized enterprises (SMEs) as their greatest challenge.116 Trade barriers and limited global integration was the third most frequently cited obstacle, underscoring the importance of resolving trade disputes and maintaining openness. Respondents see this inhibitor as a considerably greater threat for advanced economies (56%) than for developing ones (36%). Although South-South trade is growing more rapidly than other trade flows, trade among advanced economies is still almost twice as large.117 Other challenges diverge markedly by income group. Concerns over debt sustainability118 make fiscal vulnerabilities a much greater perceived threat in advanced (41%) than developing (12%) economies. Conversely, armed conflict and security weigh more heavily on developing economies (36%) than on advanced economies (15%). Chief Economists’ Outlook September 22