Ahead of Trump's Second Term... Davos Forum Confirms Concerns Over 'Protectionism'

Ahead of the inauguration of Donald Trump's second U.S. administration, which has signaled high tariffs, the majority of economic experts interviewed by the World Economic Forum (WEF, Davos Forum) expressed concerns about 'protectionism.' More than eight out of ten economists predicted that trade conflicts, including various sanctions, would intensify over the next three years, and inflation would also soar. Over 90% of respondents anticipated that companies would restructure their supply chains to avoid tariff bombs and other trade barriers.

Reuters Yonhap News

On the 16th (local time), the Davos Forum released the report titled "Chief Economists Outlook: January 2025," stating that "the global economic environment is becoming increasingly fragmented." This report summarizes in-depth interviews conducted ahead of the Davos Forum annual meeting scheduled for January 20-24 in Davos, Switzerland, with 50 economists representing countries worldwide participating in the survey.

According to the report, about 56% of chief economists expect global growth to weaken over the next year. Only 17% believed it would improve. By country, 44% of respondents said the U.S. economy would continue strong growth this year, a figure higher than the 15% recorded in the August survey last year. However, 94% and 97% of respondents expressed concerns about a rebound in inflation and rising debt, respectively, indicating long-term downward pressure on the U.S. economy.

Besides the U.S., South Asia and India were also expected to maintain robust growth. In contrast, economic prospects for Europe remained bleak, with 74% of respondents predicting 'weak' or 'very weak' growth. China also faced a consensus outlook of economic slowdown.

This report attracted particular attention as it was released amid expectations of widespread economic repercussions following the return of President-elect Trump, who declared 'America First.' Coincidentally, the forum's opening day on the 20th is also the inauguration day of President-elect Trump. Trump is scheduled to appear as an online speaker at the Davos Forum annual meeting on the 23rd. The report stated, "It is a period likely to be a tumultuous year for the global economy," adding, "Leading economists agree that protectionism will bring changes to future trade patterns."

The year 2025, beginning with President-elect Trump's return to the White House, was defined as "A turbulent year for trade." All economists surveyed, seemingly mindful of the launch of Trump's second term, unanimously agreed that "the protectionist stance will deepen."

Responses indicating that trade conflicts, including sanctions, would intensify over the next three years accounted for 83%. 94% expected divisions to deepen in the goods trade sector, and 59% anticipated this trend would extend to the services trade sector. Furthermore, it was expected that companies would engage in supply chain restructuring (93%) and focus on core markets (79%), leading to changes in trade patterns. Nevertheless, despite these protectionist concerns, nearly half of the respondents predicted that trade volumes would continue to increase this year.

A particularly worrisome aspect is the so-called 'Trump tariffs' and the retaliatory tariffs imposed by various countries. When asked whether a U.S.-China trade war would break out, 71% of chief economists responded 'yes,' and 18% said 'very likely.' Additionally, 70% believed that this retaliatory tariff war would not be confined to the U.S. and China but would expand more broadly.

The report pointed out, "Geopolitical competition and policy choices by countries including the U.S. are the main drivers of this fragmentation trend," adding, "This fragmentation could lead to increased costs for consumers and businesses. Collaboration on global challenges such as climate change will also become more difficult." In this survey, 85% of respondents said that trade wars would cause prices to soar.

Angus Collins, WEF Head of Economic Growth and Innovation, emphasized, "Growth prospects are the weakest in decades, and economic policies are more contentious than ever," adding, "In this environment, promoting global collaboration requires greater effort than ever before."

This content was produced with the assistance of AI translation services.