While a majority of chief economists expect the global economy to stabilize, there is limited confidence that the stabilization will hold, according to the just-released World Economic Forum’s Chief Economists’ Outlook.
The report found that 56 percent of chief economists surveyed expect the global outlook to remain stable or improve, which is up from May, when 89 percent said they expected conditions to weaken.
But there is limited confidence that the stabilization will hold. One of the reasons for the limited confidence is that the fiscal support that cushioned successive shocks since 2020 is unlikely to play the same role in the year ahead. Since 2020, fiscal support has been the most significant source of resilience for the global economy, according to 69 percent of surveyed economists. Only 28 percent expect it to play that role over the next 12 months.
Instead, future resilience is expected to depend increasingly on flexible supply chains, technological innovation and energy-market adaptation, with the United States and China seen as best placed to withstand shocks.
Further, 97 percent cited geopolitical conflicts as a likely source of uncertainty, while 58 percent said asset-price corrections. Only one-quarter expect the global economy to become more resilient.
“Chief Economists expect the global economy to stabilize, but uncertainty remains high with geopolitical volatility, potential asset-price corrections, greater scrutiny of AI investment and persistent cost-of-living pressures,” Attilio Di Battista, head of economic growth and transformation at the World Economic Forum, said. “Government support played a critical role in navigating successive crises, but fiscal capacity is likely to be more constrained going forward. The priority now is to strengthen the foundations of resilience before the next shock arrives.”
Among other findings, 97 percent anticipate artificial intelligence (AI) adoption to increase while 69 percent expect it to unlock meaningful productivity gains. Also, 78 percent expect data-center investment to drive a significant share of global growth, but 79 percent expect the expansion to face significant push back from local communities.
In addition, 61 percent do not expect data-center investment to drive a significant share of global job creation. Meanwhile, 78 percent expect the expansion to raise electricity prices and 58 percent say it will increase water prices.
Also, in the AI race between China and the United States, 69 percent expect Chinese large language models to catch up to their US counterparts in the next 12 months.
Additionally, 77 percent see geoeconomic fragmentation rising, with tariff increases expected by 55 percent in the United States and 43 percent in Europe. Further, two-thirds expect global trade volumes to rise, and 83 percent expect Chinese exports to markets outside the U.S. to increase.
The United States is expected to continue being the most favorable business environment for multinational companies, followed by South-East Asia, Europe, India, and China.
Finally, respondents anticipate increases in costs of living, led by food (88 percent of respondents), electricity (83 percent) and transport (77 percent). Most surveyed economists expect incomes to decrease or stagnate across most regions.