Greater than half (56%) of chief economists anticipate the worldwide economic system to weaken in 2024, with seven in 10 saying tempo of geoeconomic fragmentation will speed up, based on the newest Chief Economists Outlook.
Two-thirds mentioned industrial insurance policies will create new progress hotspots, however majority warns of rising fiscal strains and divergence between higher- and lower-income economies.
Generative AI is seen to extend productiveness and innovation, with consultants notably extra optimistic about AI-enabled advantages for high-income economies.
World financial prospects stay subdued and fraught with uncertainty, based on the newest Chief Economists Outlook launched right now, as the worldwide economic system continues to grapple with headwinds from tight monetary situations, geopolitical rifts and speedy advances in generative synthetic intelligence (AI).
Greater than half of chief economists (56%) anticipate the worldwide economic system to weaken this 12 months, whereas 43% foresee unchanged or stronger situations. A robust majority additionally consider labour markets (77%) and monetary situations (70%) will loosen over the approaching 12 months. Though the expectations for prime inflation have been pared again in all areas, regional progress outlooks differ broadly and no area is slated for very robust progress in 2024.
“The newest Chief Economists Outlook highlights the precarious nature of the present financial surroundings,” mentioned Saadia Zahidi, Managing Director, World Financial Discussion board. “Amid accelerating divergence, the resilience of the worldwide economic system will proceed to be examined within the 12 months forward. Although world inflation is easing, progress is stalling, monetary situations stay tight, world tensions are deepening and inequalities are rising – highlighting the pressing want for world cooperation to construct momentum for sustainable, inclusive financial progress.”
Regional variations
The outlook for South Asia and East Asia and Pacific stays optimistic and broadly unchanged in comparison with the final survey, with a powerful majority (93% and 86% respectively) anticipating at the very least average progress in 2024. China is an exception, with a smaller majority (69%) anticipating average progress as weak consumption, decrease industrial manufacturing and property market issues weigh on the prospects of a stronger rebound.
In Europe, the outlook has weakened considerably because the September 2023 survey, with the share of respondents anticipating weak or very weak progress virtually doubling to 77%. In the USA and the Center East and North Africa, the outlook is weaker too, with about six in 10 respondents foreseeing average or stronger progress this 12 months (down from 78% and 79% respectively). There’s a notable uptick in progress expectations for Latin America and the Caribbean, sub-Saharan Africa and Central Asia, though the views stay for broadly average progress.
Geopolitical rifts compound uncertainty
About seven in 10 chief economists anticipate the tempo of geoeconomic fragmentation to speed up this 12 months, with a majority saying geopolitics will stoke volatility within the world economic system (87%) and inventory markets (80%), improve localization (86%), strengthen geoeconomic blocs (80%) and widen the North-South divide (57%) within the subsequent three years.
As governments more and more experiment with industrial coverage instruments, consultants are practically unanimous in anticipating these insurance policies to stay largely uncoordinated between international locations. Whereas two-thirds of chief economists anticipate industrial insurance policies to allow the emergence of latest financial progress hotspots and important new industries, a majority additionally warn of rising fiscal strains (79%) and divergence between higher- and lower-income economies (66%).
AI takes the highlight
Chief economists anticipate AI-enabled advantages to differ broadly throughout revenue teams, with notably extra optimistic views in regards to the results in high-income economies. A robust majority mentioned generative AI will improve effectivity of output manufacturing (79%) and innovation (74%) in high-income economies this 12 months. Wanting on the subsequent 5 years, 94% anticipate these productiveness advantages to turn out to be economically important in high-income economies, in comparison with solely 53% for low-income economies.
Nearly three-quarters (73%) don’t foresee net-positive influence on employment in low-income economies and 47% mentioned the identical for high-income economies. The views are considerably extra divided on the probability of generative AI to extend requirements of dwelling and to result in a decline in belief, with each being barely extra probably in high-income markets.