The global economy 'at a crossroads' ahead of Davos: Chief Economists Outlook

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Ralph Ossa, chief economist, WTO: Uncertainty is extremely high. We are waiting to see what the new administration is going to do and how the world is going to react. And I think that's going to determine a lot of where things are headed.

Robin Pomeroy, host Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them. This week we’re taking the pulse of the global economy, as the Forum publishes its Chief Economists Outlook.

Ralph Ossa: The policy choices that are being made now, this year, are really going to determine which path we are going to go as a global economy and whether that's a path that is embracing international trade or whether that's a path that is disrupting international trade.

Robin Pomeroy: The chief economist of the World Trade Organization gives his take on the global economy at this crucial moment, as world leaders gather in Davos and Donald Trump returns to the White House promising a robust stance on trade whose impact on economies cannot yet be assessed.

Ralph Ossa: I do expect firms and countries also to hedge their bets and diversify their trade rather than rely on individual partners, be they friends or geopolitical rivals. A friend today may not be a friend any more tomorrow.

Robin Pomeroy: The Chief Economists Outlook - a survey of chief economists on where we are and where we’re going - predicts subdued economic growth, with the key word uncertainty, particularly around trade.

Ralph Ossa: What we don't see actually is deglobalisation, even though there's all sorts of shocks. But what we do see is trade reorienting on geopolitical lines.

Robin Pomeroy: Follow Radio Davos wherever you get your podcasts, or at wef.ch/podcasts.

I’m Robin Pomeroy at the World Economic Forum, and with this look at the Chief Economists Outlook...

Ralph Ossa: So I would really say we are at a crossroads.

Robin Pomeroy: This is Radio Davos

Robin Pomeroy: Welcome to Radio Davos.

The World Economic Forum has just published the latest Chief Economists Outlook. The Chief Economists Outlook is a regular taking of the pulse of the world economy by talking to chief economists around the world. I'm delighted to say one of them has joined us here on Radio Davos. He's the chief economist at the World Trade Organization. His name's Ralph Ossa. Ralph, how are you?

Ralph Ossa: Thank you very much for having me. I'm great.

Robin Pomeroy: So let's get straight to this Chief Economists Outlook. I'll just read you a couple of bullet points from it and we'll take things from there.

The outlook for the global economy remains subdued and downside risks have intensified, not least because of heightened uncertainty around the economic implications of November's US presidential election.

Well, this week in Davos is the week that Donald Trump returns to the White House. There's a lot of uncertainty. I mean, how do you see the global economy on kind of the most macro level possible?

Ralph Ossa: And so I would say three things, perhaps, about the global economy. The first point I would make, it's been made before, but I think it's important to remember is that the global economy has been remarkably resilient and also continues to be remarkably resilient.

We had after the catch up, after the pandemic, we had relatively stable growth in 23-24, we expect the same for 25, which is quite remarkable given all the all the difficulties that that the global economy has been facing, all the shocks that have been thrown at it.

At the same time, I very much agree with with the perspective from the outlook that that the growth rate is still subdued. It's about one percentage point lower than it used to be in the in the 2010s. And that's not just because of weak Europe. That's a that's a broader phenomenon.

And lastly, of course, you said it uncertainty is extremely high. We are waiting to see what the new administration is going to do and how the world is going to react. And I think that's going to determine a lot of where things are headed.

Robin Pomeroy: Why do you say was it was surprisingly resilient?

Ralph Ossa: Well, I mean, if you think about all the all the shocks, I mean, first of all, we had a pandemic. We had record high inflation. We have contractionary monetary policy now. We have debt problems. I mean, it's we have trade tensions. We have geopolitical tensions. So quite something, I would say. And against this background, I think it's it's not so bad overall how things have been have been turning out.

Robin Pomeroy: I wonder if we are the calm before a storm. But I guess we've had the big storm, Covid was. Obviously, wars we know about that continue to rumble on. But I'm just reading a figure from the Chief Economists Outlook, which is a survey of people like you from all around the world: a majority, 56%, expect the global economy to weaken over the next year, compared with 70% expect it to strengthen. It sounds like everyone's hedging their bets, as economists always do, but it does seem there is a majority there that says it's going to be weak.

Ralph Ossa: You know, we like to do that on the one hand, but on the other hand, of course. So, I mean, what can I say? So we don't have a forecast yet for next year. We're going to come out with our forecast for next year in April. So I don't have a deeply informed opinion. I think I think for me, the key word here is really uncertainty.

And uncertainty is already, I think, affecting investment decisions, is affecting trade flows.

I mean, one thing that I always say, particularly when you think about international trade, is not just about trade costs, is not just about tariffs, but it's also about the expectation of what these trade costs and tariffs are going to be. Because if you as an investor can't be sure what tariffs are going to be next year, what they're going to be in five years, that already today, even though nothing might have happened, it's already going to affect your your choices.

Robin Pomeroy: There's a really good illustration of that in the report when it comes to tariffs.

Donald Trump has said tariffs are his favourite word. And in the weeks leading up to his inauguration, has promised to impose them for a variety of reasons on a variety of countries. 90% of the chief economists we spoke to expect the U.S., the new U.S. tariffs to be smaller than the ones promised in the presidential campaign. They're saying, don't be too alarmed. There may be tariffs, but they probably won't be as big as was mentioned.

But a large majority expects multinational companies, most multinational companies to start on potentially costly changes such as restructuring supply chains. 91% of respondents said they expected that to happen. So already, no matter if, no matter how big those tariffs. Already those changes are happening. And that could have in itself leaving the tariffs aside, some kind of impact on economies right now, right?

Ralph Ossa: That's exactly what I was trying to say, that, of course, you know, we need to we need to see now what's what's going to happen in terms of in terms of tariffs. As you as you know, we've had various announcements. So it's difficult to speculate what is actually going to happen. But the uncertainty itself really plays a big role.

And there's good evidence actually for this having an effect also the other way round, interestingly.

So one example that I think is quite illuminating is when China joined the WTO, what happened is that US tariffs against China actually didn't change. The main thing that happened is that there was more certainty than before, that these tariffs would also remain in place. And just as a reduction in trade policy uncertainty people have estimated has contributed to the surge of Chinese exports into the United States. There's other examples. For example, Portugal joining the European Union. Same story of Spanish tariffs against Portugal actually didn't change yet Portuguese exports to Spain exploded because once firms know that these low tariffs are there to stay, then of course, they're willing to make these these costly investment decisions.

And you talked about a restructuring of supply chains. Of course, in this uncertain world where you don't know about policy shocks that might hit you. I mean, we haven't even talked about climate risks, geopolitical risks more broadly. Of course, firms try to diversify their supply chains and not rely only on one partner anymore.

Robin Pomeroy: You mentioned risks. The World Economic Forum published its Global Risks Report which, like the Chief Economists Outlook, is one of the major products from the World Economic Forum that really give an idea of where we might be going as a planet. And climate change, the risk you mentioned there, always been kind of the number one, always seen on the long term horizon. And new this year was, in the short term risks, it's fears about war, about state on state conflict. What impact do you think we're already seeing from those kinds of concerns? Geopolitical tensions, to put it at its nicest. Or war and the threat at its worst, potentially?

Ralph Ossa: Maybe let me preface this by saying that what we don't see actually is deglobalisation, even though there's all sorts of shocks, as we have discussed, also hitting international trade.

But it's still the case that trade growth is more or less proportional to GDP growth. So the trade to GDP ratio actually on average hasn't really changed that much.

But what we do see is trade reorienting on geopolitical lines. This is most obvious in the relationship between China and the United States, which I suppose is also the relationship that many of the respondents of this risks survey might have in mind.

And there you see that since the first wave of Trump tariffs from the previous administration, the trade share, so bilateral trade between China and the United States has grown much, much more slowly than trade between either of these countries and third countries.

But it's actually something that's not just restricted to bilateral trade between the United States and China. So one thing we've done in our analysis, we have divided the world into hypothetical geopolitical blocs based on voting behaviour at the United Nations General Assembly. And you see quite clearly the trade between these, quote unquote blocs is growing more slowly than trade within these blocs, meaning that, you know, there are some there's some evidence of our friendshoring.

Although speaking of friendshoring, I mean, this is something that people always talk about, that there's going to be more trade with allies. I mean, one thing that remains to be seen also in terms of the tariffs that we will likely see is how many of them I mean, some of them have also been threatened to be imposed against geopolitical allies. So maybe this is going to make those friends showing also a little bit less attractive, but we'll see.

Robin Pomeroy: So friendshoring, for anyone who's never heard that expression before, it's a manipulation of the word offshoring, so you offshore your manufacturing somewhere. It's still offshoring, but it's to countries that are considered friendly to you. And maybe what you're saying here is maybe we're not sure who are friends are anymore. Is that the thing?

Ralph Ossa: Well, it's I mean, we have, on the one hand, we clearly see these patterns in the data, as I described. On the other hand, I mean, politics is very polarised, as you know. So who's your friend today may not be your friend anymore tomorrow.

So I do expect firms and countries also to hedge their bets and really diversify their trade rather than rely on individual partners, be they friends or geopolitical rivals.

Robin Pomeroy: I don't want to have this whole conversation about trade, but you are from the World Trade Organization so let's carry on for a bit but then I want to get back to talk about inflation and about debt, two things you also mentioned when you started speaking.

Just another point there from the Chief Economists Outlook. There is unanimity among the chief economist question that developments in the US will alter the trajectory of the global economy with a solid majority of around 60% characterising this change as a long term shift rather than short term disruption. And the most likely factor driving those lasting changes to global trade patterns is protectionism.

Ralph Ossa: I mean, this is, of course, something that that we are following very closely and that that we are also concerned about.

Maybe building on the discussion we had in the in the previous question about China US relations. Of course, this is a relationship that's particularly in the focus when it comes to a new tariffs, higher tariffs. And of course there's already relatively high tariffs in place on bilateral trade.

But one figure that most people don't know is that bilateral trade between China and the United States actually only accounts for less than 3% of of of world trade. So generates 80% of the news, but only 3% of world trade, if you will. So what is really going to be crucial is whether trade tensions - I think it's safe to predict that, you know, trade tensions between these two countries are going to persist - I think the key question is, is this going to spread to to other countries or is this going to be contained to that bilateral relationship?

Robin Pomeroy: What is the risk of that kind of spread? What why do we see trade tensions spread? And do you expect that to happen?

Ralph Ossa: Well, I certainly don't hope that that this is going to happen because, I mean, there's always a risk of of tit for tat so if one country starts imposing tariffs, then, you know, some partners may be quick to respond and also impose tariffs.

But this is something that we would warn against simply against the background that the rest of the world is quite big, let me put it like that. And I think there's a large chunk of international trade that can be kept. I think, clear of these frictions.

I mean, just, just to give you one number that is very important for us at the WTO, despite all these trade tensions, despite even the prominence of regional trade agreements, more than 75% of world trade is still conducted directly on WTO terms, meaning directly under the Most Favoured Nation tariffs of the WTO. So the vast majority of trade continues to flow under those rules based system, with also great benefits to our trading partners, including, by the way, the United States. Maybe I should add that 85% of U.S. exports are conducted directly under this MFN tariff, directly under the rules of the of the WTO.

And what people often forget is that the WTO is about more than just tariffs, of course. I mean, we have the TRIPS Agreement, for example, also, which protects intellectual property rights. More than 20%, I forget the exact number. More than 20% of international patent applications come from U.S. firms. And these patents are protected by the the WTO at the end of the day. So I do think that, you know, preserving the system is going to be important for all countries, but also for the United States.

Robin Pomeroy: Here's a factoid on that, on trade tensions. Large majorities of the chief economist surveyed expect a trade war of tit for tat trade restrictions between the US and China. 89% of them expect that and more broadly, i.e. beyond the US and China, 68% expect that. This phrase trade war gets bandied about. I don't suppose is there actually a definition. There's trade tensions. There's tariffs. There's rhetoric. When does it become a trade war? Do you have a definition?

Ralph Ossa: I mean, we tend to speak of trade tensions and not trade war, not to escalate the language.

As much as we as much as we dislike trade tensions, it's very different to have a tension, trade tensions and to have a war. So I wouldn't I wouldn't start mixing the two.

But from an economics perspective, it's really the difference between conducting trade policy in a cooperative one and uncooperative fashion. So if you have a if you have a trade war, and so what the academic literature would say is that's a situation where I try to benefit at your expense and you try to benefit at my expense. If we just non-corporate if we set our trade policy in a way which is lose-lose at the end, and that's the whole point of having trade policy cooperation, that's the whole point of having the WTO, that by kind of reining in our own unilateral incentives to protect, at the end of the day, we are better off.

Robin Pomeroy: Let me play devil's advocate and say I'm in favour of tariffs because I want to bring jobs back to my country. I don't want to have to rely on countries that I perceive as in some way hostile. Why is that such a bad thing.

Ralph Ossa: We have to distinguish, I think, between the the security discussion, which I admit is a difficult discussion and more an economic discussion.

I mean, there's all sorts of economic reasons why you unilaterally might want to impose tariffs, perhaps to employ to expand your mining manufacturing sector, perhaps to generate additional jobs, perhaps to protect domestic industries and so on. The problem is just that other countries have the same incentive also. So if I try to expand my manufacturing sector, for example, at your expense and you try to expand yours at my expense, then at the end of the day, none of us has achieved that objective and all we've done is increase prices for our consumers and also for our for our firms, which ultimately then, you know, hurts the hurts the economy.

Robin Pomeroy: And there'll be other criticisms of globalisation, global trade. We talked about offshoring of jobs, tax avoidance, concerns about low standards on labour or the environment on climate change. Look at Europe imposing border mechanisms to try and impose greenhouse gas reduction standards on imported manufactured goods. All of those things, if we had just complete free trade and liberalised trade, none of those issues would be addressed. That's some of the things that critics of the globalised system would say. Do you have an answer to that?

Ralph Ossa: Well, let me put it like that. So I think if I take a step back and just think about the globalisation crisis that we are in, I think we can we can call it that. My diagnosis is that it's not so much that people have forgotten about the economic gains from trade, but exactly as you say, I think more and more people are of the view that trade is part of the problem when it comes to addressing some of the key challenges that we're facing as a world. And for me, these are to maintain peace and security. And I also mean economic security. So resilient supply chains. It is to reduce poverty and inequality, and it is also to maintain and to achieve a sustainable economy.

Now, a lot of the work that we've been trying to do at the WTO to look at this, take these concerns seriously and try to understand under what conditions trade can actually be part of the solution and not be part of the problem. And I think we've convinced ourselves we are trying to convince the world the trade is an important part of the solution.

And let me give you the example related to climate change, because I think that's most obvious to make. You know, when people think about trade, typically they think about transport and when they think about transport, to think about transport emissions, to think about dirty ships, plants, trucks and so on. And of course, if that's your perspective, if you stop there immediately, trade is part of the problem. But what they - and I don't want to dispute that we need to decarbonise the transport sector, of course - but what they don't see is that most of the emissions are actually related to production. And there's a lot of variation in production emissions across countries. So to the extent that you buy something, we import something from a greener origin, on net, this can be good for the environment. So building on this observation, we came up with this notion of environmental gains from trade and environmental comparative advantage. The logic is very simple. We all know that is economic and some trade would come from countries specialising in what they're relatively good at. And by exactly the same logic, there's also environmental gains from trade, which come from countries specialising in what they're relatively green.

And now the key difference, though, is that these environmental gains from trade, they don't just fall from heaven, they don't just materialise naturally as the outcome of market forces, but they need some help and in particular they need support of climate policies in place. So if you have the right climate policies in place, then trade actually becomes part of the solution. Another way of saying a trade is actually a very strong force multiplier for climate policies, and we have some quantitative work on this also.

Robin Pomeroy: That's a whole episode of Radio Davos in itself, Ralph. We'll leave that one there. I've got a lot of questions. It's a very, very interesting topic.

Moving away from trade for a moment then, inflation. Chief Economists Outlooks over the last couple of years, certainly since Covid, it's always been this terror of inflation in certain regions and globally. I'll just read the facts from this year. Global inflation continues to ease with the International Monetary Fund, projecting an annual average of 4.3% this year. That it's a difficult number because price increases around the world vary so much, but that's the number they've come up with, an average annual price of 4.3%. That is down from in 2023 6.7%. So that's a really steady, decent drop. That's got to be good news in most people's eyes, right?

Ralph Ossa: Yes, absolutely. I think that's excellent news. Which I would qualify it a little bit. So one point, of course, I mean, it's it's obvious, I suppose, but I think still really important to keep in mind. The fact that inflation has come down only means that prices are rising less quickly, that doesn't mean that past price increases are going to be reversed. And I think much of the political discontent that we see at the moment with the economic situation is not so much now about the incremental change in prices, but it's just the fact that you go to a grocery store and things are still a lot more expensive than they have been in the past.

So the cumulative change and cumulative increase in prices I think are still hurting or hurting a lot of households, a lot of homes significantly.

And the second point I would make is that if you look at China in particular, the concern now seems to be deflation. And so almost, you know, things going the other way around with people being concerned that perhaps China could repeat some of the experience that Japan had, where you had a kind of an unholy combination of deflation difficulties in the housing sector and so on.

And I know you don't want to talk about trade, but I can't help but I can't help talking about trade because with inflation, it's actually really, really interesting because many of the goods that feature disproportionately in international trade are capital goods, so goods that firms use to make investments, but also consumer durables, so things like a fridge and, I don't know, a new stove, you know, things like that. They feature disproportionately in international trade. Now what happens if you have high inflation? People tend to postpone these purchases. Firms tend to postpone these investments. And this is exactly why we saw such a slump in international trade in 2023.

So I said before that growth has been quite stable. So growth actually hasn't changed so much, GDP growth that is, in 2023, 2024, even 2025. Yet trade, the volume of merchandise trade, actually fell in 2023. And the key reason or one of the key reasons for this is exactly inflation. So it's even relevant also for international trade.

Robin Pomeroy: Let's talk about debt. Another thing you mention as a problem that gets spoken about a lot when we're talking about the global economy. Why is debt a problem, and what do we mean by debt, let's start with that, and why is it such a particular problem right now?

Ralph Ossa: I mean, I think the main, I'm not sure the main, but one important kind of debt that people have in mind when they talk about it, is sovereign debt, meaning government debt, because, of course, the Covid pandemic has required extreme fiscal measures. Also, many governments took expensive action which accumulated debt. And now the question is, well, what do we do with that? How do we start repaying that?

And also in the United States, by the way, we we didn't really talk about that when we when we talked about inflation. But I think one really interesting point that the Chief Economists Outlook makes on inflation is also related to fiscal policy. So the fact that in the United States, it seems like where we are going is lower taxes, not necessarily lower government expenditure. So you also have a potential debt situation there.

Robin Pomeroy: And also for some countries, those high inflation rates that we talked about meant higher interest rates and therefore those countries repaying those debts, these were loans they took out when interest rates were very low, these were bonds they issued when interest rates were low.

Ralph Ossa: Exactly.

Robin Pomeroy: Now those costs have soared and leave them very little to spend on anything else.

Ralph Ossa: Exactly. So it's great that you add this point. So of course, you not only have to issue that you need to repay the debt, but you also have the issue that you need to service the debt that you have incurred, meaning that you need to make these interest payments and that money is then not available to do things you would like to do and perhaps also need to do more urgently, such as investing in education, investing in health care and other important government expenses.

Robin Pomeroy: GDP is the measure of that everyone looks at. It shows how wealthy a nation, particularly the the increase or decrease in GDP - economic growth - it's such an important metric. But there are critics of it who would say it doesn't reflect people's wellbeing necessarily. It certainly doesn't affect or show whether as a country or as a community they're moving forward, they're getting happier, healthier, that their environment is getting better. Where do you stand on GDP?

Ralph Ossa: It is the key statistic that people use, the key summary statistic that people use to measure the health of the success of of the macro economy. And I think it's also going to continue to be that way.

Having said this, it's a it's a highly imperfect measure. And you mentioned already some of the reasons. So one reason, of course, is that it doesn't tell you anything about inequality. And so you would need to complement that with measures of inequality. It doesn't tell you anything about non-market activities. So, for example, if you used to look after your children yourselves and now it's day-care that looks after your children, that shows up as GDP growth, even though in terms of the actual services that have been delivered in the economy, not much has changed. Only difference is that you don't do it yourself anymore. And then also the the the the issue of environmental degradation or more generally, even depreciation, the fact that some of the goods that you produce are also simply used to replenish the capital stock.

So there are these criticisms. But at the end of the day, if you look, for example, at the Human Development Index, which tries to take other metrics into account, education in particular and health in particular, it ends up being extremely highly correlated for most economies.

So I do think I mean, coming back to what we said before, at the end of the day, economics is crucial, economic success is also crucial for for success in many of the other important indicators, be it life expectancy, child mortality, literacy and so on. So the corelation is very high.

Robin Pomeroy: So in economies where GDP growth is positive, you see that correlation with some of those things you just mentioned.

Ralph Ossa: Exactly. I mean, not always, but I mean, just look at the last 200 years or make it even simpler, look at the last 30 years. I mean, we just looked at this in a in a recent report because the WTO turns 30 this year. So we looked at what has changed in the last 30 years.

And, of course, you had amazing GDP growth in low and middle income economies, by the way. I can't help emphasise driven by international trade. I mean, this was trade-led growth, but it wasn't just macroeconomic growth, but it lifted hundreds of millions of people out of poverty. The share of people living in extreme poverty in low and middle income economies over the last 30 years has fallen from something like 40% down to something like 10%. I mean, this is an absolutely dramatic improvement in the livelihood of literally hundreds of millions of people, driven by economic growth, which in turn was driven by international trade, at least to some extent.

Robin Pomeroy: What's the one thing you wish people would understand about economics?

Ralph Ossa: Well, I guess the one thing we already talked about is that economics is really, really important. But as a trade economist, I would have to say comparative advantage. So the principle of comparative advantage, Paul Samuelson, the father of modern economics, was once challenged by a physicist at a conference, and the physicist said, Can you tell me one insight of all of social sciences that is both not obvious to intelligent people and at the same time undeniably true? And Samuelson mentioned this principle of comparative advantage.

And one way to think about it quite easily. If you look at the world economy, you can ask yourself, well, how can it be that a high wage country like Switzerland, for example, can compete with a low wage country like India, for example? How can this be? And the answer is, of course, productivity differences.

Similarly, you can ask yourself, how can a low productivity country ever compete in international markets with a high productivity country with so much better at making everything? And the key to that is wage differences.

And what this all means is that success in international trade is driven by a combination of the two. So cross country differences in wages effectively soak up cross country differences in average productivity. So what remains to determine export success is relative differences in productivity. And this is the comparative advantage.

So you export what you're relatively good at and not what you're absolutely good at. And I think it's so important because what it what it means fundamentally is that competition between countries is very different from competition between corporations because countries cannot go out of business. Corporations can go out of business, but countries can't. So wages are going to adjust to always make sure that you have a comparative advantage in something.

What this also means is that if you're a successful business person who knows how to lead a firm, your intuition of what makes this firm successful does not necessarily translate to economic policies. So successful business people are not necessarily good economic policy makers. So it's such a fundamental concept that I would invite everyone to take a careful look.

Robin Pomeroy: Wouldn't it logically be the case that a country that has the advantage of low wages and is good enough at manufacturing a certain thing, there's two problems with that. There's two problems with that. One is they'll take the jobs away from countries and you'll have a lot of unemployment in those higher wage countries. And then also, once the wages grow in that country that's taken those jobs won't they then just move on to another country with still lower wages. And if you just have this chain of unemployment and social unrest, everything else that goes with it, or is there an economic reason why that shouldn't happen?

Ralph Ossa: Yes. So I think there's there's an economic reason. Let me say a few things.

So first, I think we have to be very careful when we think about trade and aggregate employment, because both from a theoretical perspective, trade liberalisation, changes in trade regimes just don't lead to major changes in aggregate employment.

And just think about history. I mean, after the Second World War, we had Western Europe grow at dramatic rates. We had Japan grow at dramatic rates. Now we have China grow at dramatic rates yet we have full employment, for example, in the United States. So aggregate employment doesn't seem to be the issue.

Now, having said this, of course, we have to be very mindful of the fact that trade liberalisation or fast growth in other countries can lead to disruptions in labour markets, meaning that can favour certain industries at the expense of other industries, and it can also lead to economic hardships. So I think we need to we need to acknowledge that.

And then the question is how you how you deal with it. And the one thought experiment that I find helpful is that - and I really don't want to minimise this - and, by the way, I think how to deal with this is often the job of of domestic policies and not so much trade policies - but one thought experiment that I find helpful is that trade liberalisation in many ways is not so different from technological change. I mean, you can think of trade in very abstract terms. You can think of trade as a machine where you stuff exports and imports come out. So if you were able to convert exports into imports with a machine, you know, that would effectively from a macroeconomic perspective be what what what the trade is. Yet simply because it's international trade and because it's a foreign country, you know, people tend to criticise that much more than technological change. I mean we have all sorts of technological change happening all the time that is leading to disruptions in labour markets that we need to take those very seriously. The only thing I would kind of caution against is singling trade out in that broader discussion.

Robin Pomeroy: So we're at the start of the year. We're at Davos. What is the message you get from the Chief Economists Outlook? It is that the economy is likely to weaken over the year. Inflation is easing, but there's huge uncertainty about the global economy and particularly about trade. I mean, where do you stand? Are you optimistic about 2025? How would you sum up where we stand at the moment as we look out to the year?

Ralph Ossa: So I would really say we are at a crossroads.

The economy is still resilient both in terms of growth as well as in terms of trade. Yes, we see some geoeconomic fragmentation, but we don't see yet any deglobalisation.

And I think the policy choices that are being made now this year are really going to determine which path we are going to go as a global economy and whether that's a path that is embracing international trade or whether that's a path that is disrupting international trade.

And I'm still I'm optimistic because at the end of the day, I am deeply convinced them, not just because I'm from the World Trade Organization, that international trade in general and also the WTO in particular is really beneficial to everyone because if you really break it down to the most simple way of looking at it, I think all of us would agree that the division of labour is an absolutely fundamental pillar of our prosperity.

If I had to make all of my clothes, all of my food, all of my housing, all of my shelter and so on, by myself personally, clearly this would be a disaster. So what do I do? I specialise in something. You specialise in something. And we exchange. I think it stands to reason that this is the absolute fundamental pillar of our prosperity.

Now, international trade is just an extension of this very basic idea across international borders. And why should the power of the division of labour stop just because there's an international border in the way?

So I'm really hoping that policy makers also support that, influenced by business interests, by consumer interests, by civil society, will come to appreciate that we are all better off cooperating and we are better off trading than moving towards some sort of tit for tat situation that is going to leave all of us worse off.

Robin Pomeroy: Ralph Ossa, chief economist at the World Trade Organization, thanks very much for joining us on Radio Davos.

Ralph Ossa: Thank you very much for having me.

Robin Pomeroy: The Chief Economists Outlook January 2025 is available now at wef.ch/chiefeconjan25 link in the show notes.

And if you are going to the Annual Meeting or following it from afar, be sure to check out all our podcasts - here on Radio Davos, on Meet the Leader and on Agenda Dialogues - all three are available wherever you listen to podcasts and at weforum.org/podcasts.

For example, don’t miss the recent Rado Davos episodes on The Global Risks Report and the Global Cybersecurity Outlook - those are both great primers for some of the big issues that will be discussed at Davos.

And catch up on all the action at the Annual Meeting 2025 at wef.ch/wef25 and across social media using the hashtag #WEF25.

This episode of Radio Davos was written, presented and produced by me, Robin Pomeroy. Studio production was by Taz Kelleher.

We will be back very soon, but for now thanks to you for listening and goodbye.