The latest Chief Economists Outlook, released today, paints a picture of a global economy facing subdued prospects and significant uncertainty. This challenging economic landscape is shaped by a combination of tight financial conditions, escalating geopolitical tensions, and the swift advancements in generative artificial intelligence (AI).
As the world grapples with tight financial conditions, geopolitical rifts, and rapid AI advancements, over half of the chief economists surveyed (56%) anticipate a weakening global economy, while 43% expect conditions to remain unchanged or improve.
The report underscores the precarious state of the global economy. Saadia Zahidi, Managing Director at the World Economic Forum, highlights the accelerating divergence and resilience tests facing the global economy. Despite easing global inflation, concerns over stalling growth, tight financial conditions, deepening global tensions, and rising inequalities call for urgent global cooperation to foster sustainable, inclusive economic growth.
Regional Variations in Economic Outlook
The economic outlook varies significantly across regions. South Asia and East Asia and Pacific maintain a positive outlook, with a strong majority expecting at least moderate growth in 2024. However, China presents a notable exception, with only 69% of respondents foreseeing moderate growth, impacted by weak consumption, lower industrial production, and property market concerns.
Europe’s outlook has deteriorated since September 2023, with 77% of respondents now expecting weak or very weak growth, nearly double the previous survey’s figure. The United States and the Middle East and North Africa also show weakened prospects, with about 60% of respondents predicting moderate or stronger growth, a decline from previous expectations. Conversely, there’s an uptick in growth expectations for Latin America and the Caribbean, sub-Saharan Africa, and Central Asia, though the consensus remains on broadly moderate growth.
Geopolitical Rifts and Economic Uncertainty
Approximately 70% of chief economists believe geoeconomic fragmentation will accelerate this year. The majority agree that geopolitics will fuel volatility in the global economy (87%) and stock markets (80%), increase localization (86%), strengthen geoeconomic blocs (80%), and widen the North-South divide (57%) over the next three years.
As governments experiment with industrial policy tools, a lack of coordination between countries is expected. While two-thirds of chief economists see these policies fostering new economic growth hotspots and industries, concerns about rising fiscal strains (79%) and a growing divergence between higher- and lower-income economies (66%) persist.
The Spotlight on AI
Generative AI’s impact is expected to vary across income groups. In high-income economies, a strong majority of chief economists predict increased efficiency in output production (79%) and innovation (74%) due to generative AI. Over the next five years, 94% anticipate these productivity benefits to become economically significant in high-income economies, compared to just 53% in low-income economies.
The employment impact of AI is a contentious issue. Almost three-quarters (73%) of the economists do not foresee a net-positive impact on employment in low-income economies, and 47% hold the same view for high-income economies. Opinions are divided on whether generative AI will enhance living standards and lead to a decline in trust, with these outcomes being slightly more probable in high-income markets.
The 2024 global economic outlook, as analyzed by chief economists, paints a picture of a world at a crossroads. The challenges posed by geopolitical tensions, financial conditions, and the disruptive potential of AI are significant. Yet, there’s also a recognition of the opportunities these changes bring, particularly in terms of technological advancements and potential new growth avenues. The need for global cooperation and a coordinated approach to policy and innovation has never been more critical. As the world navigates these complex dynamics, the insights from these chief economists provide valuable guidance for decision-makers and stakeholders across the globe.
The Chief Economist Outlook builds on the latest policy development research as well as consultations and surveys with leading chief economists from both the public and private sectors, organized by the World Economic Forum’s Centre for the New Economy and Society. It aims to summarize the emerging contours of the current economic environment and identify priorities for further action by policy-makers and business leaders in response to the compounding shocks to the global economy. The survey featured in this briefing was conducted in November-December 2023.