Jersey's economy is forecast to grow by less than half of one percent this year, following an estimated contraction of 1. 5% in 2024.
Advisors to the government have downgraded their expectations as they warn that the weakened global outlook could impact the island.
The Fiscal Policy Panel has told Ministers to be even more cautious with public finances as a result.
The FPP Chair Sir Jon Cunliffe said: " Geopolitical and global instability are at unprecedented levels and economic forecasts for major global economies, including the UK - Jersey’s main trading partner - have weakened.
"The weakened global outlook could negatively affect Jersey via higher prices for imported goods, subdued consumer demand and potentially via reduced tourism and financial services activities.”
The FPP forecasts a 'sluggish' 0.4% economic growth this year, and an average of around 1% a year up to 2029. This follows am estimated 1.5% shrinking of the economy in 2024.
The economic advisors guide the treasury Minister and States Assembly as they plan fiscal policy for the annual Budget in November.
Treasury Minister Elaine Millar has welcomed the latest report and signalled that the government remains confident in the work it is doing to address the economic impacts of global challenges.
"We are grateful to the Fiscal Policy Panel (FPP) for their valuable work. Their advice reinforces the importance of our work to curb expenditure growth and ensure the competitiveness of our economy.
"Ministers will continue to maintain sustainable public finances and support long-term economic growth in the interests of Islanders.
"While there is significant economic volatility across the globe, Jersey continues to be well placed to face these challenges and attract new business and investment.”
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