ISLAMABAD: As the World Economic Forum began its annual session in Davos on Monday, the Chief Economists Outlook report says global economic prospects remain subdued and fraught with uncertainty. The global economy continues to grapple with headwinds from tight financial conditions, geopolitical rifts and rapid advances in generative artificial intelligence, says the report released by World Economic Forum.

More than half of chief economists expect the global economy to weaken this year, while 43 per cent foresee unchanged or stronger conditions. A strong majority also believes labour markets (77pc) and financial conditions (70pc) will loosen over the coming year.

Although expectations for high inflation have been pared back in all regions, regional growth outlooks vary widely and no region is slated for very strong growth in 2024.

The Chief Economist Outlook builds on the latest policy development research as well as consultations and surveys with leading chief economists from both the public and private sectors, organised by the World Economic Forum’s Centre for the New Economy and Society.

“The latest Chief Economists Outlook highlights the precarious nature of the current economic environment,” said Saadia Zahidi, Managing Director of World Economic Forum.

“Amid accelerating divergence, the resilience of the global economy 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 and inclusive economic growth,” she said.

The outlook for South Asia and East Asia and Pacific remains positive and broadly unchanged compared to the last survey, with a strong majority (93pc and 86pc, respectively) expecting at least moderate growth in 2024. China is an exception, with a smaller majority (69pc) expecting moderate growth as weak consumption, lower industrial production and property market concerns weigh on the prospects of a stronger rebound.

In Europe, the outlook has weakened significantly since the September 2023 survey, with the share of respondents expecting weak or very weak growth almost doubling to 77pc. In the United States and the Middle East and North Africa, the outlook is weaker too, with about six in 10 respondents foreseeing moderate or stronger growth this year (down from 78pc and 79pc, respectively).

There is a notable uptick in growth expectations for Latin America and the Caribbean, sub-Saharan Africa and Central Asia, although the views remain for broadly moderate growth.

About seven in 10 chief economists expect the pace of geo-economic fragmentation to accelerate this year, with a majority saying geopolitics will stoke volatility in the global economy (87pc) and stock markets (80pc), increase localisation (86pc), strengthen geo-economic blocs (80pc) and widen the North-South divide (57pc) in the next three years.

Published in Dawn, January 16th, 2024