According to the World Trade Organization (WTO), heightened protectionism among major trading powers is contributing to a gloomy outlook for world trade.
The latest KPMG Global Economic Outlook predicts international GDP will decrease from 3.2% in 2024 to 2.7% in 2025, with a slight recovery to 2.8% in 2026. Meanwhile, global inflation is expected to cool from 4.5 percent in 2024 to 3.6% in 2025, reaching 3.1% in 2026.
During KPMG International’s Global Economic Outlook webinar, live polling during the broadcast revealed that 34% of attendees identified macroeconomic volatility as their top concern, while 30% cited geopolitical instability.
Forty-seven per cent reported that their company’s growth prospects had worsened since January, and only 40% indicated no significant changes planned in response to tariffs and global trade dynamics.
"In today's business landscape, KPMG's latest Global Economic Forecasts are unlikely to catch any business leaders by surprise," said Regina Mayor, global head of clients & markets at KPMG International.
"Throughout my experience engaging with CEOs, I've observed that uncertainty consistently ranks as their foremost concern. Currently, executives are adopting a ‘pause and prepare’ strategy, delaying significant investment decisions as they brace for potential economic downturns that may hinder growth aspirations.” Regina Mayor
KPMG’s global geopolitics team describes the current international scenario as a ‘Critical Recession,’ transitioning from a US-dominated era of globalisation towards a multipolar world. Emerging powers like India, Brazil, Mexico, Türkiye, and Southeast Asian economies are asserting their influence, leading to a more contested geopolitical environment.
Stefano Moritsch, KPMG’s head of global geopolitics, commented, “We now face potentially more global conflict than at any time since 1946. This historic surge in turmoil adversely affects supply chains and operations, particularly near critical trade nodes such as the Bab-El-Mandeb Strait/Suez Canal, the South China Sea, and the Panama Canal."
The Asia-Pacific region, heavily reliant on international trade, faces increasing economic challenges due to trade uncertainty and US trade policies. KPMG International predicts Singapore’s GDP growth could plummet by 3% by early 2026, potentially leading to a recession.
Hong Kong’s GDP growth is also expected to decline by about 1.5% within the same period. China's GDP growth is predicted to reduce by about 0.5% by the end of 2025, intensifying to around 0.9% by 2027 due to US tariffs.
Dr. Brendan Rynne, KPMG International’s Asia-Pacific Chief Economist, noted, “The new US administration’s trade policy changes are going to have some serious consequences for ASPAC economies. These repercussions are particularly severe due to the region’s intertwined trade networks."
