Chief Economists Predict A Downturn in the World Economy by 2024: WEF Survey

A study of senior economists released on Monday predicted increasing geo-economic fragmentation and a weakening of the global economy in 2024, coinciding with the world’s top leaders congregating here for their annual assembly.

The World Economic Forum (WEF) Chief Economists Outlook study cautioned that there is still a lot of economic uncertainty ahead and that the outlook for the world economy is still bleak.

According to the report, the world economy is still facing challenges from unstable financial markets, rifts in international relations, and the rapid development of generative artificial intelligence (AI).

Of the leading economists surveyed, 56% predicted a weakening of the global economy this year, whilst 43% predicted either stable or better circumstances.

However, the forecast for East Asia and the Pacific, as well as South Asia, remained favorable, with a significant majority seeing at least modest growth in 2024.

China stood out as the only country where a smaller majority (69%) predicted modest growth due to worries about the property market, poor industrial output, and weak consumer spending all weighing against the possibility of a greater recovery.

A sizable majority of respondents worldwide predicted that throughout the next year, the labor markets (77%) and financial circumstances (70%) would ease. Although projections for high inflation have been cut down in all countries, regional growth outlooks vary greatly and no region is set for particularly strong growth in 2024.

WEF Managing Director Saadia Zahidi said, “The latest Chief Economist’s Outlook highlights the precarious nature of the current economic environment.”

“Amid accelerating divergence, the resilience of the global economy will continue to be tested in the year ahead.

Even if global inflation is down, growth is stalling, financial conditions are still tight, tensions are building globally, and inequality is increasing, she said. This highlights the urgent need for international collaboration to create momentum for inclusive, sustainable economic development.

In Europe, the prognosis has dropped dramatically since the September 2023 poll, with the number of respondents predicting poor or very weak growth practically tripling to 77 percent.

The view is even less optimistic in the US and the Middle East and North Africa (MENA), where around half of the respondents (down from 78% and 79%, respectively) anticipate moderate or greater growth this year.

Although projections for generally modest growth continue, there was a noticeable increase in growth predictions for Central Asia, sub-Saharan Africa, Latin America, and the Caribbean.

A majority of chief economists predict that geopolitics will increase localization (86%), strengthen geo-economic blocs (80%), exacerbate volatility in the global economy and stock markets (80%), and widen the North-South divide (57%), among other effects. Approximately seven out of ten chief economists anticipate that the pace of geo-economic fragmentation will pick up speed this year.

Experts almost universally predict that while states experiment more and more with industrial policy instruments, international coordination of these policies will remain limited.

A majority of chief economists warn of growing budgetary difficulties and the growing gap between higher- and lower-income nations, even though two-thirds of them believe industrial policies would facilitate the formation of new sectors and hotspots for economic growth.

Chief economists anticipate that the advantages of AI will differ significantly depending on income levels, with high-income countries seeing the most positive impacts.

A sizable majority predicted that this year, generative AI would boost high-income nations’ productivity (by 79%) and innovation (by 74%) in output creation.

In high-income countries, 94% of respondents anticipate that these productivity gains will become economically important during the next five years, compared to only 53% in low-income nations.

In low-income nations, over three-quarters (73%) do not anticipate a net-positive effect on employment; in high-income economies, 47% agreed.

On whether generative AI would raise living standards and cause a drop in trust—both of which are somewhat more probable in high-income markets—opinions are a little more split.

The WEF’s Center for the New Economy and Society conducted surveys and discussions with top chief economists in the public and private sectors, and their efforts provided the foundation for the Chief Economists’ Outlook. The most recent research on policy formation is also included in the outlook. The most recent poll was conducted in November and December of 2023.