….Say Outlook for Europe Remains Gloomy
The World Economic Forum (WEF) has reported that most economists foresee that the global economy will this year become stronger or remain stable, with the US’ economy expected to be the biggest driver of the growth worldwide.
The Forum, in its latest ‘Chief Economists Outlook’ report on the global economy’s prospects published on Wednesday in Geneva, Switzerland, stated the report presented a growing sense of cautious optimism about the global economy in 2024, as more than 80% of chief economists expected the global economy to either strengthen or remain stable this year – nearly double the proportion in the previous report.
Even then, the report indicated that geopolitical and domestic political tensions still cloud the horizon, as some 97% of respondents anticipated that geopolitics would contribute to global economic volatility this year while 83% said domestic politics would be a source of volatility in 2024, a year when nearly half the world’s population is voting.
Commenting on the report’s findings, the WEF Managing Director, Saadia Zahidi, said: “The latest Chief Economists Outlook points to welcome but tentative signs of improvement in the global economic climate.
“This underscores the increasingly complex landscape that leaders are navigating. There is an urgent need for policy-making that not only looks to revive the engines of the global economy but also seeks to put in place the foundations of more inclusive, sustainable and resilient growth”, Zahidi added.
On regional variations on the growth outlook, the report reflected that growth expectations had improved, though unevenly, across the globe, showing a significant boost in the outlook for the United States, where nearly 97% of the chief economists, up from 59% in January this year, expect moderate to strong growth in the economy this year.
Similarly, the chief economists forecast that Asian economies also appear robust, with all respondents projecting at least moderate growth in the South Asia and East Asia and Pacific regions, while expectations for China are slightly less optimistic, with three-quarters expecting moderate growth and only 4% predicting strong growth this year.
By contrast, the report’s outlook for Europe remains gloomy, with nearly 70% of economists predicting weak growth for the remainder of 2024. Other regions are expected to experience broadly moderate growth, with a slight improvement since the previous survey.
The WEF stated that the latest survey highlighted the escalating challenges confronting businesses and policy-makers as 86% of respondents foresee that tensions between political and economic dynamics will be a growing challenge for decision-makers this year while 79% expect heightened complexity to weigh on decision-making.
The report listed some of the factors expected to affect corporate decision-making as including the overall health of the global economy (cited by 100%), monetary policy (86%), financial markets (86%), labour market conditions (79%), geopolitics (86%) and domestic politics (71%).
It added that notably, 73% of economists believed that companies’ growth objectives would drive decision-making, almost double the proportion that cited the role of companies’ environmental and social goals (37%).
On the long-term prospects and priorities for the global economy, the report showed that most chief economists were upbeat about the prospects for a sustained rebound in global growth, with nearly 70% expecting a return to 4% growth in the next five years (42% within three years).
According to the WEF, in high-income countries, the chief economists expect growth to be driven by technological transformation, artificial intelligence, and the green and energy transition, however, opinions are divided on the impact of these factors in low-income economies.
The report’s findings showed that there was greater consensus among the chief economists on the factors that would drag growth, with geopolitics, domestic politics, debt levels, climate change and social polarization expected to dampen growth in both high and low-income economies.
The report identified some factors that could help in tackling these challenges, stressing that in terms of the policy levers most likely to foster growth in the next five years, the most important across the board are innovation, infrastructure development, monetary policy, and education and skills.
It added that low-income economies were seen as having more to gain from interventions relating to institutions, social services and access to finance compared to high-income economies, noting that there is a notable lack of consensus on the impact for growth of environmental and industrial policies.
