Misinformation and disinformation remain top short-term risks for the second consecutive year, underlining their persistent threat to societal cohesion and governance by eroding trust and exacerbating divisions within and between nations.
Davos/NEW DELHI: The 55th annual meeting of the World Economic Forum in Davos took place amidst a swirl of uncertainties. Most legacy economies are in turmoil, while growth economies are collaborating. Established democracies in Europe are unstable, while most Asian countries are enjoying steady leadership. Technology is becoming smarter, but new players are disrupting AI leaders.
President Donald Trump has added another crucial dimension to the uncertainties of 2025 with his dogged commitment to change the rules of geopolitics and global trade.
REORGANISING THE WORLD ORDER
Addressing a gathering of global leaders, Klaus Schwab, World Economic Forum Founder and Chairman of the Board of Trustees, set the tone for the year by highlighting the meeting’s theme: Collaboration for the Intelligent Age.
“This transition from the Industrial to the Intelligent Age is occurring at an exponential pace, carrying unprecedented risks for humanity as we strive to prepare and adapt for its complexities,” he said. “Yet, it also offers significant opportunities to transcend our current challenges and spark a new renaissance—one defined by advancements in knowledge, health, culture and societal welfare.”
Schwab called on the global community to rise to the moment with “constructive optimism”, urging stakeholders from all sectors—government, business, civil society and academia—to unite in crafting solutions to shared challenges. “By embracing constructive optimism and believing in our collective capacity and commitment to improving the state of the world, we can shape the Intelligent Age as an age where every human being can realize their full potential.”
Speaking at what he described as “one of the most uncertain geopolitical and geoeconomic moments in generations,” Børge Brende, President and CEO, World Economic Forum, stressed that the world is at a critical inflection point and that 2025 will be a year of enormous consequence. “The longstanding international order that existed for the last three decades has receded. We need to find more effective ways to work together. It is the only way forward.”
New leadership of the world will be driven by countries like China, India, Saudi Arabia, UAE and South East Asia even as US will continue to dominate the global economy. The decline of Europe as a global player will have a significant impact on the world order. Europe seems to have lost its primacy in the world as a consequence of three critical weaknesses. Its energy security remains dependent on Russia. Its manufacturing strength has been severely undermined by China. And its external security is challenged, with the US demanding that European countries pull their weight for NATO defence spending.
GLOBAL RISKS
The Global Risk report by WEF reveals an increasingly fractured global landscape, where escalating geopolitical, environmental, societal and technological challenges threaten stability and progress. While economic risks have less immediate prominence in this year’s survey results, they remain a concern, interconnected with societal and geopolitical tensions.
State-based armed conflict is identified as the most pressing immediate global risk for 2025, with nearly one-quarter of respondents ranking it as the most severe concern for the year ahead.
Misinformation and disinformation remain top short-term risks for the second consecutive year, underlining their persistent threat to societal cohesion and governance by eroding trust and exacerbating divisions within and between nations. Other leading short-term risks include extreme weather events, societal polarization, cyber-espionage and warfare.
Environmental risks dominate the longer-term outlook, with extreme weather events, biodiversity loss and ecosystem collapse, critical change to Earth systems and natural resources shortages leading the 10-year risk rankings. The fifth environmental risk in the top 10 is pollution, which is also perceived as a leading risk in the short term. Its sixth-place ranking in the short term reflects a growing recognition of the serious health and ecosystem impacts of a wide range of pollutants across air, water and land. Overall, extreme weather events were identified prominently as immediate, short-term and long-term risks.
The long-term landscape is also clouded by technological risks related to misinformation, disinformation and adverse outcomes of AI technologies.
“Rising geopolitical tensions and a fracturing of trust are driving the global risk landscape” said Mirek Dušek, Managing Director, World Economic Forum. “In this complex and dynamic context, leaders have a choice: to find ways to foster collaboration and resilience, or face compounding vulnerabilities.”
ECONOMIC OUTLOOK FOR 2025
WEF’s economic outlook report points to further uncertainties. Over 56% of leading chief economists expect weaker global economic conditions in 2025, compared to only 17% expecting improvement. Optimism on the short-term prospects for US growth is tempered by concerns over rising debt and inflation, while Europe has now recorded the weakest regional growth outlook for nearly three years. Though 48% of chief economists still expect global trade volumes to rise, despite intensifying of tariff wars.
While the United States appears poised for a short-term boost—with 44% of chief economists predicting strong growth in 2025, up from 15% when they were asked in August last year—the outlook for the year ahead remains less optimistic for other major economies. Europe continues to rank as the weakest region for the third consecutive year, with nearly three-quarters (74%) expecting weak or very weak growth. Meanwhile, China’s economic momentum is projected to slow amid subdued consumer demand and weaker productivity, further illustrating the uneven and uncertain nature of any global recovery.
Nearly half (48%) of chief economists anticipate an increase in global trade volumes in 2025, underscoring the resilience of global commerce. However, a large majority expect intensifying trade tensions, both between major powers and more widely. Protectionism is identified as the primary factor that will drive lasting changes to global trade patterns, with other prominent contributors including conflict, sanctions and national security concerns. Some 82% of respondents predict greater regionalization of trade over the next three years, alongside a continuing gradual shift from goods to services.
Another report revealed the impact of economic sanctions and increasing geoeconomic fragmentation. WEF estimates that fragmentation resulting from statecraft policies could cost the global economy $0.6 trillion to $5.7 trillion—up to 5% of global GDP—due to reduced trade and cross-border capital flows as well as lost economic efficiencies. It could also increase global inflation by more than 5% in a very high fragmentation scenario.
The report, developed in collaboration with Oliver Wyman, shows that the economic impact of rising geoeconomic fragmentation could surpass the disruptions caused by the 2008 financial crisis or the Covid-19 pandemic. As countries increasingly use the financial system to advance their geopolitical objectives—evidenced by a 370% rise in sanctions since 2017, along with subsidies, industrial policies and discussions about the creation of parallel financial architectures—the report calls on policymakers to adopt economic statecraft that fosters cooperation, sustainable development and resilience in the global economy.
UNSURE JOBS SCENARIO
The World Economic Forum, employment report says that job disruption will equate to 22% of jobs by 2030, with 170 million new roles set to be created and 92 million displaced, resulting in a net increase of 78 million jobs. Technological advancements, demographic shifts, geoeconomic tensions and economic pressures are the key drivers of these changes, reshaping industries and professions worldwide.
Drawing on data from over 1,000 companies, the report finds that the skills gap continues to be the most significant barrier to business transformation today, with nearly 40% of skills required on the job set to change and 63% of employers already citing it as the key barrier they face. Technology skills in AI, big data and cybersecurity are expected to see rapid growth in demand, but human skills, such as creative thinking, resilience, flexibility and agility, will remain critical. A combination of both skill types will be increasingly crucial in a fast-shifting job market.
Frontline roles and essential sectors like care and education are set for the highest job growth by 2030, while advances in AI and renewable energy are reshaping the market—driving an increase in demand for many technology or specialist roles while driving a decline for others, such as graphic designers.
Being prepared for the unknown uncertainties is perhaps the best policy for business leaders, citizens and policymakers in 2025.
* Pranjal Sharma is an economic analyst and author of The Next New: Navigating the Fifth Industrial Revolution.