The World Economic Forum’s Chief Economists Outlook for 2024 paints a somber picture, projecting a weakening global economy with increased geo-economic fragmentation. As leaders gather at Davos, the report indicates that over half of chief economists (56%) anticipate a decline in the global economy, citing factors such as tight financial conditions, geopolitical tensions, and the rapid advancement of generative artificial intelligence (AI).
Despite this overarching concern, South Asia and East Asia-Pacific present a more optimistic outlook, with a strong majority expecting at least moderate growth in 2024. However, China stands as an exception, with 69% of economists predicting only moderate growth due to weak consumption, lower industrial production, and concerns in the property market.
Globally, the majority of respondents foresee loosening labor markets (77%) and improved financial conditions (70%) over the coming year. While expectations for high inflation have diminished across regions, the report underscores the variability in regional growth outlooks, with no region poised for very strong growth in 2024.
Saadia Zahidi, Managing Director of the World Economic Forum, acknowledges the precarious nature of the current economic environment, emphasizing the need for global cooperation to spur sustainable, inclusive economic growth. The report highlights challenges such as stalling growth, tight financial conditions, deepening global tensions, and rising inequalities.
In Europe, economic prospects have significantly weakened since the September 2023 survey, with 77% of respondents expecting weak or very weak growth. The outlook in the United States, as well as the Middle East and North Africa (MENA), is also less optimistic, with six in 10 economists anticipating moderate or stronger growth, down from 78% and 79%, respectively.
Latin America and the Caribbean, sub-Saharan Africa, and Central Asia, however, show a notable uptick in growth expectations, though they remain broadly moderate. The survey reveals that seven in 10 chief economists anticipate an acceleration in geo-economic fragmentation in 2024. The majority expects geopolitics to fuel volatility in the global economy (87%) and stock markets (80%), increase localization (86%), strengthen geo-economic blocs (80%), and widen the North-South divide (57%) in the next three years.
Governments experimenting with industrial policy tools may not coordinate their efforts globally, according to the report. While two-thirds of chief economists foresee industrial policies fostering the emergence of new economic growth hotspots and vital industries, they also warn of rising fiscal strains and divergence between higher- and lower-income economies.
Generative AI is identified as a significant factor shaping economic landscapes. Chief economists expect AI-enabled benefits to vary across income groups, with more optimistic views in high-income economies. A strong majority anticipates that generative AI will enhance efficiency in output production (79%) and innovation (74%) in high-income economies in 2024. Over the next five years, 94% expect these productivity benefits to become economically significant in high-income economies, compared to only 53% for low-income economies.
However, concerns emerge regarding the impact of AI on employment. Nearly three-quarters (73%) of chief economists do not foresee a net-positive impact on employment in low-income economies, and 47% express similar concerns for high-income economies. Views are divided on the likelihood of generative AI increasing standards of living and leading to a decline in trust, with both outcomes slightly more likely in high-income markets.
The Chief Economists Outlook underscores the complexity and challenges facing the global economy, urging collaboration and coordinated efforts to navigate uncertainties. As we navigate through 2024, the report serves as a critical resource for understanding the dynamics influencing economic trajectories across regions and the implications of emerging technologies like AI.