Global Economic Outlook 2024: Chief Economists Predict Decline

Chief economists warn of slowing global growth in 2024

The majority of economists polled by the World Economic Forum predict the global economic outlook to deteriorate this year, as geopolitical fragmentation deepens.

"Global economic prospects remain subdued and fraught with uncertainty," according to the WEF study, which was published Monday.

"While there are positive developments, such as easing inflationary pressures and advances in the field of artificial intelligence (AI), businesses and policy-makers face persistent headwinds and continued volatility as global economic activity remains slow, financial conditions remain tight and geopolitical rifts and social strains continue to grow."

A study of 30 top economists conducted between November and December of last year revealed that 56% of those polled anticipate the global economy to worsen in 2024, 20% expect it to remain steady, and 23% predict "somewhat stronger" economic circumstances.

Meanwhile, the International Monetary Fund and chief economists predict a decline anticipate global economic growth to slow to 2.9% in 2024, down from 3% the previous year.

According to the WEF poll, economists' estimates for different economies vary significantly, with experts being the most pessimistic about Europe's prospects. 77% of respondents polled expect regional development to slow this year, nearly double the rate reported in September's survey.

Economists also become more pessimistic about the United States' future. In the last study, 78% predicted moderate or greater growth this year, but the current data shows that percentage has dropped to 56%.

Respondents' outlooks for South Asia, East Asia, and the Pacific were essentially favourable and stable, but they were more cautious about China, with the majority (69%) predicting only moderate economic development.

Geopolitical rifts were a major source of concern for economists, with 69% expecting the pace of geopolitical fragmentation to intensify in 2024.

"When asked about the implications of recent developments … chief economists continue assigning a prominent role to geopolitical factors across macroeconomic and financial developments," the authors of the research stated.

"About 87% expect recent geopolitical developments to stoke global economic volatility in the next three years, and eight out of ten expect it to heighten volatility in stock markets."

It comes after a year of high global tensions, with Russia's war in Ukraine still ongoing, China-US ties strained, and worries of a wider Middle East conflict sparked by Israel's struggle with Hamas.

2024 will also witness an unprecedented number of people voting in elections, with over 75 nations, including major economies such as the United States and the United Kingdom, going to the polls.

Inflation predictions were more favourable in the WEF survey of economists, with 70% expecting financial conditions to ease.

Economists' estimates of high inflation declined across all countries, with Europe and the United States seeing the most improvement, but the research cautions that two-thirds of those polled still expect moderate inflation in all regions.

Geo-economic fragmentation will accelerate

About seven in ten chief economists expect geoeconomic fragmentation to accelerate this year, with the majority predicting that geopolitics will exacerbate volatility in the global economy (87%) and stock markets (80%), increase localization (86%), strengthen geoeconomic blocs (80%), and widen the North-South divide (57%) over the next three years.

As governments experiment with industrial policy instruments, experts almost unanimously predict that these policies will remain mostly uncoordinated between nations.

While two-thirds of chief economists believe that industrial policies would enable the formation of new economic growth hotspots and critical new industries, the majority also warn of growing fiscal difficulties and divergence between higher- and lower-income nations.

Chief economists believe AI-enabled benefits to differ significantly across income categories, with high-income nations expecting the effects to be more positive.

This year, a large majority of high-income economies expect generative AI to improve output production efficiency (79%) and creativity (74%).

Looking ahead five years, 94% predict these productivity gains to become economically important in high-income nations, compared to only 53% in low-income economies.

Almost three-quarters (73%=) do not anticipate a net-positive impact on employment in low-income nations, while 47% expect the same in high-income ones.

The possibility of generative AI increasing living standards and leading to a fall in trust is fairly split, with both being somewhat more likely in high-income areas.

The Chief Economist's Outlook is based on the most recent policy development research, as well as discussions and polls with senior chief economists from both the public and private sectors, organized by the WEF's Centre for the New Economy and Society.