More than 50% of global chief economists expect the world economy to weaken in 2024, as it grapples with tight financial conditions, geopolitical tension and rapid advances in generative artificial intelligence (AI).

The Chief Economists Outlook released by the World Economic Forum (WEF) on Monday said about 70% of the economists reckon the pace of geo-economic fragmentation will accelerate this year. Regional prospects vary widely and no region is slated for very strong growth in 2024, showed the outlook report, although expectations of high inflation have been pared back across regions. The WEF’s 2024 annual meeting is taking place from January 15 to 19 in Davos, where the outlook was released.

“Two-thirds of the economists said industrial policies will create new growth hotspots, but the majority warns of rising fiscal strains and divergence between higher- and lower-income economies,” the WEF said. As per the report, 77% of the economists believe labour markets will loosen over the coming year, while 70% expect the same fate for global financial conditions. WEF managing director Saadia Zahidi said: “Though global inflation is easing, growth is stalling, financial conditions remain tight, global tensions are deepening and inequalities are rising – highlighting the urgent need for global cooperation to build momentum for sustainable, inclusive economic growth.”Regional variations

The outlook for South Asia and East Asia and Pacific remains positive and broadly unchanged from the last survey, with a strong majority (93% and 86%, respectively) expecting at least moderate growth in 2024. However, only 69% vouch for China’s growth prospects as weak consumption, lower industrial production and property market concerns weigh on the prospects of a stronger rebound. .

Geopolitical rifts

About 87% of the chief economists said geopolitics will stoke volatility in the global economy, while 80% believed it will impact stock markets. As many as 86% reckon that geo-political tensions will increase localisation bid and 80% say it will bolster geo-economic blocs.

AI at the centre stage

The chief economists expect AI-enabled benefits to vary sharply across income groups, with notably more optimistic views about its effects in high-income economies. About 79% of the economists felt generative AI will increase efficiency of production (79%) and 74% believed it would boost innovation in high-income economies this year.