More than 80 per cent of chief economists worldwide expect the global economy to either strengthen or remain stable this year – nearly double the proportion in the previous report in 2023, according to the World Economic Forum.
The share of those predicting a downturn in global conditions declined from 56 per cent in January to 17 per cent, reflecting the increasingly bullish sentiments held by chief economists.
Over two-thirds of chief economists who participated in the WEF survey predicted a sustained rebound of global growth, driven by technological transformation, artificial intelligence, and the green transition.
The latest Chief Economists’ Outlook by the WEF cautioned that geopolitical and domestic political tensions cloud the horizon. Some 97 per cent of respondents anticipate that geopolitics will contribute to global economic volatility this year. A further 83 per cent said domestic politics will cause volatility in 2024, a year when nearly half the world’s population is voting.
The survey featured in this briefing was conducted in April 2024.
“The latest Chief Economists Outlook points to welcome but tentative signs of improvement in the global economic climate,” said Saadia Zahidi, managing director of WEF. “This underscores the increasingly complex landscape that leaders are navigating. There is an urgent need for policy-making to revive the engines of the global economy and to put in place the foundations of more inclusive, sustainable, and resilient growth.”
According to International Monetary Fund, global growth, estimated at 3.2 per cent in 2023, is projected to continue at the same pace in 2024 and 2025. Pierre-Olivier Gourinchas’ IMF’s chief economist said the projection for global growth in 2024 and 2025 is below the historical (2000–19) annual average of 3.8 per cent, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth.
“Economic activity is showing surprising resilience with inflation returning to target. Despite significant central bank hikes to restore price stability, the global economy grew steadily, supported by favorable supply developments. Global growth, estimated at 3.2 per cent in 2023, is projected to continue at the same pace in 2024 and 2025,” said Gourinchas.
Growth expectations have improved, though unevenly, across the globe. The survey reveals a significant boost in the outlook for the United States, where nearly all chief economists (97 per cent) now expect moderate to strong growth this year, up from 59% per cent in January.
Asian economies also appear robust, with all respondents projecting at least moderate growth in South Asia East Asia and the Pacific regions. Expectations for China are slightly less optimistic, with three-quarters expecting moderate growth and only 4.0 per cent predicting strong growth this year.
By contrast, the outlook for Europe remains gloomy, with nearly 70 per cent 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.
The latest survey highlights the escalating challenges confronting businesses and policy-makers. Tensions between political and economic dynamics will be a growing challenge for decision-makers this year, according to 86 per cent of respondents, while 79 per cent 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 per cent), monetary policy (86 per cent), financial markets (86 per cent), labour market conditions (79 per cent), geopolitics (86 per cent) and domestic politics (71 per cent). Notably, 73 per cent 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 per cent).
Long-term prospects and priorities
Most chief economists are upbeat about the prospects for a sustained rebound in global growth, with nearly 70% expecting a return to 4.0 per cent growth in the next five years (42 per cent 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. There is greater consensus on the factors that could drag growth, with geopolitics, domestic politics, debt levels, climate change, and social polarization expected to dampen growth in both high- and low-income economies.
Policy levers most likely to foster growth in the next five years include innovation, infrastructure development, monetary policy, and education and skills. Low-income economies will have more to gain from interventions relating to institutions, social services, and access to finance compared to high-income economies. There is a notable lack of consensus on the impact of growth of environmental and industrial policies.