WEF 2024 Chief Economists Survey predicts global economic weakening in 2024

As global leaders convene in Davos for the annual World Economic Forum, the Chief Economists Outlook report, released on January 15, indicates a projected weakening of the global economy in 2024 and an acceleration of geo-economic fragmentation.

The survey, conducted by the World Economic Forum (WEF), gathered insights from chief economists, revealing that 56% of respondents expect the global economy to weaken in 2024. Factors contributing to this outlook include persistent challenges such as tight financial conditions, geopolitical tensions, and rapid generative artificial intelligence (AI) advancements.

While more than half of the chief economists expressed concerns about a weakened global economy, a positive outlook remains for South Asia, East Asia, and the Pacific, with a significant majority anticipating at least moderate growth in 2024. China, however, stands as an exception, with 69% of respondents expecting moderate growth amid concerns about weak consumption, lower industrial production, and property market uncertainties.

Globally, chief economists foresee loosening labor markets (77%) and financial conditions (70%) over the coming year. Despite easing expectations for high inflation, varying regional growth outlooks highlight the absence of any region slated for very strong growth in 2024.

WEF Managing Director Saadia Zahidi emphasizes the precarious nature of the current economic environment, stating, "Amid accelerating divergence, the global economy’s resilience will continue to be tested in the year ahead. 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."

Notably, Europe’s economic outlook has significantly weakened since September 2023, with 77% of respondents expecting weak or very weak growth. The survey also indicates a projection of accelerated geo-economic fragmentation, with seven in 10 chief economists foreseeing its pace to increase in 2024. Geopolitical factors are expected to stoke volatility in the global economy (87%) and stock markets (80%).

As governments experiment with industrial policy tools, chief economists expect these policies to remain largely uncoordinated between countries. While two-thirds anticipate industrial policies to foster the emergence of new economic growth hotspots, concerns arise regarding rising fiscal strains and divergence between higher- and lower-income economies.

The survey also delves into expectations regarding generative AI, revealing that chief economists anticipate varied benefits across income groups. Due to generative AI, high-income economies are expected to experience increased efficiency in output production (79%) and innovation (74%). However, views on its impact on employment and living standards are more divided, with concerns about a decline in trust.