Davos World Economic Forum 2024 Update: Global Economic Outlook
What do chief economists foresee for the global economy in 2024?
Davos-Klosters, 15 January 2024
The global economic landscape is facing a year of uncertainty and challenges as we enter 2024. According to the latest Chief Economists Outlook report from the World Economic Forum, more than half of chief economists expect the global economy to weaken this year.
Regional Variations and Outlooks
South Asia and East Asia-Pacific
Despite the overall weakening outlook, South Asia and East Asia-Pacific remain positive and show resilience compared to other regions. A strong majority of economists, 93% and 86% respectively, expect at least moderate growth in these regions for 2024. However, China stands out as an exception, with 69% of economists predicting only moderate growth. Weak consumption, lower industrial production, and concerns in the property market are weighing on its prospects for a stronger rebound.
Europe
Europe's economic outlook has weakened significantly since the previous survey conducted in September 2023. The number of economists expecting weak or very weak growth has almost doubled to 77%. This deterioration reflects the challenges faced by the region, indicating a need for concerted efforts to address the economic slowdown.
United States and Middle East and North Africa (MENA)
Similar to Europe, the United States and MENA regions are also experiencing a weaker outlook for economic growth. Instead of the previous majority foreseeing moderate or stronger growth, the majority now expect the growth to be weaker this year. This change highlights the need for careful policy considerations to address the concerns in these regions.
Latin America and the Caribbean, Sub-Saharan Africa, and Central Asia
While the growth expectations for these regions remain broadly moderate, there is a notable uptick in outlook for Latin America and the Caribbean, sub-Saharan Africa, and Central Asia. This positive trend suggests potential opportunities for economic expansion and development in these regions.
Geopolitical Rifts and Uncertainty
Geo-economic Fragmentation
About 70% of chief economists anticipate an acceleration in the pace of geo-economic fragmentation this year. Geopolitics is expected to fuel volatility in the global economy and stock markets, increase localization, strengthen geo-economic blocs, and widen the North-South divide over the next three years. These geopolitical rifts create a challenging environment for economic stability and cooperation.
Uncoordinated Industrial Policies
As governments experiment with industrial policy tools, the majority of experts predict that these policies will remain largely uncoordinated between countries. While two-thirds of chief economists anticipate the emergence of new economic growth hotspots and vital industries, they also express concerns about rising fiscal strains and divergences between higher- and lower-income economies.
AI Takes the Spotlight
AI-Enabled Benefits and Varying Impact
Chief economists have varying views on the benefits of AI-enabled technologies across income groups. In high-income economies, a strong majority of economists expect generative AI to increase efficiency of output production and innovation. However, there is less optimism regarding low-income economies, with 73% of economists not foreseeing a net-positive impact on employment. This disparity highlights the need for inclusive AI strategies to address the potential inequality that may arise.
Productivity Benefits and Standard of Living
Looking at the next five years, 94% of chief economists expect the productivity benefits of generative AI to become economically significant in high-income economies, compared to only 53% for low-income economies. The impact on standards of living and trust remains more divided, with both being slightly more likely to be affected in high-income markets.
The Davos World Economic Forum 2024 Update presents a challenging outlook for the global economy. With more than half of chief economists predicting a weakening global economy, coupled with regional variations and geopolitical rifts, it is crucial to foster global cooperation and sustainable, inclusive economic growth. Additionally, the varying impact of AI across income groups calls for comprehensive strategies to ensure equitable benefits and address potential inequalities. By understanding these dynamics and taking strategic actions, policymakers and business leaders can navigate the complexities and seize opportunities for a more prosperous future.
Source: World Economic Forum