As many as 82 percent of chief economists expect the global economy to either strengthen or remain stable this year, a new report said on Wednesday. Moreover, the share of chief economists predicting a downturn in global conditions declined from 56 percent in January to 17 percent, the World Economic Forum’s latest Chief Economists Outlook released on Wednesday said.
However, they are also cautious about the geopolitical and domestic political tensions that could cloud the horizon.
Some 97 percent of respondents anticipate that geopolitics will contribute to global economic volatility this year. A further 83 percent said domestic politics will be a source of volatility in 2024, a year when nearly half the world’s population is voting.
“The latest Chief Economists Outlook points to welcome but tentative signs of improvement in the global economic climate,” said Saadia Zahidi, managing director, World Economic Forum. “This underscores the increasingly complex landscape that leaders are navigating. There is an urgent need for policy-making that not only looks to revive the engines of the global economy but also seeks to put in place the foundations of more inclusive, sustainable and resilient growth.”
Uneven growth
While growth expectations have improved, they remain uneven. The survey reveals a significant boost in the outlook for the United States, where nearly all chief economists (97 percent) now expect moderate to strong growth this year, up from 59 percent in January.
Asian economies also appear strong, with all respondents projecting at least moderate growth in the South Asia and East Asia and Pacific regions.
The expectations for China, however, are slightly less optimistic, with three-quarters expecting moderate growth and only 4 percent predicting strong growth this year.
By contrast, the outlook for Europe remains gloomy, with nearly 70 percent of economists predicting weak growth for the remainder of 2024. Other regions are expected to experience broadly moderate growth, with a slight improvement since the previous survey.
Tackling challenges
The survey highlights the escalating challenges confronting businesses and policy-makers. Tensions between political and economic dynamics will be a growing challenge this year, according to 86 percent of respondents, while 79 percent expect heightened complexity to weigh on decision-making.
Among the factors expected to affect corporate decision-making are the overall health of the global economy (cited by 100 percent), monetary policy (86 percent), financial markets (86 percent), labour market conditions (79 percent), geopolitics (86 percent) and domestic politics (71 percent). Notably, 73 percent of economists believe that companies’ growth objectives will drive decision-making, almost double the proportion that cited the role of companies’ environmental and social goals (37 percent).
Long-term prospects
Most chief economists are upbeat about the prospects for a sustained rebound in global growth, with nearly 70 percent expecting a return to 4 percent growth in the next five years (42 percent within three years). In high-income countries, they expect growth to be driven by technological transformation, artificial intelligence, and the green and energy transition. However, opinions are divided on the impact of these factors in low-income economies.
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