Economists are increasingly concerned about the risk of a global economic recession in 2023, as reflected in a recent Reuters poll. Many attribute this heightened anxiety to U.S. President Donald Trump’s tariffs, which they believe have significantly undermined business confidence.
Just three months prior, these same economists had a more optimistic outlook for global economic growth, but the trade tensions have since triggered turmoil in financial markets, erasing trillions in stock market value and shaking investor confidence, particularly concerning U.S. assets and the dollar. Despite the temporary suspension of some of the most severe tariffs, a 10% blanket duty remains in place, as well as a substantial 145% tariff on imports from China, America’s largest trading partner.
James Rossiter, the head of global macro strategy at TD Securities, emphasized the difficulties businesses face in making long-term plans under such uncertain conditions. Many global companies have responded by revising their revenue forecasts downward or even withdrawing them entirely.
The poll indicated an overwhelming consensus, with over 300 economists unanimously agreeing that tariffs have had a negative impact on business sentiment—92% reported negative effects, while only 8% viewed the situation as neutral. Consequently, three-quarters of the economists adjusted their forecasts for global growth in 2025 downward, lowering the median estimate from 3.0% to 2.7%.
The outlook for individual economies showed similar downward revisions, particularly for Canada and Mexico, which saw significant decreases in their growth projections. When asked about the likelihood of a global recession this year, 60% of economists flagged it as a high or very high risk, while a mere 4% viewed it as very low.
Timothy Graf from State Street highlighted the broader implications of the tariffs, noting they could stifle the progress central banks have made in controlling inflation. With the potential for a stagnation-like environment—characterized by low growth, high inflation, and rising unemployment—more than 65% of the major central banks in the poll are unlikely to meet their inflation targets this year.