The global economy is entering a period of weak growth and systemic disruption, according to the World Economic Forum’s (WEF’s) latest ‘Chief Economists’ Outlook’, published on September 23.

The report revealed that 72% of surveyed chief economists expect the global economy to weaken over the next year, amid intensifying trade disruption, rising policy uncertainty and accelerating technological change. These findings point to the emergence of a new economic environment shaped by persistent disruption and growing fragmentation, the WEF said.
 
The outlook highlighted sharp regional fault lines. Emerging markets are anticipated to be the main engines of growth, with the Middle East and North Africa (Mena), South Asia and East Asia and Pacific seen as bright spots.

According to the report, one in three chief economists expect strong or very strong growth in these regions. The outlook for China is more mixed, with 56% of chief economists anticipating moderate growth, although deflationary pressures are expected to persist.

Further, growth is expected to remain more stagnant in advanced economies. In Europe, 40% expect weak growth, with 74% anticipating fiscal loosening and 88% expecting low or moderate inflation. In the US, 52% of chief economists anticipate weak or very weak growth, 59% foresee high inflation and 85% believe monetary policy will be loosened. 

The chief economists warn that advanced and developing economies are on increasingly divergent growth pathways, with 56% expecting greater divergence over the next three years.

The outlook revealed that chief economists overwhelmingly agree that today’s disruptions are structural rather than cyclical. Large majorities anticipate long-term disruption in natural resources and energy, cited by 78%, technology and innovation by 75%, trade and global value chains by 63% and global economic institutions also by 63%.

This marks an important shift in that the global economy is not so much weathering isolated shocks as realigning, raising the stakes for new forms of leadership, cooperation and resilience, the report showed.

“The contours of a new economic environment are already taking shape, defined by disruption across trade, technology, resources and institutions. Leaders must adapt with urgency and collaboration to turn today’s turbulence into tomorrow’s resilience,” WEF MD Saadia Zahidi said.
 
The report shows that structural shifts in the global economy are playing out most visibly in trade, fiscal policy and debt.

About 70% of surveyed chief economists rate the current level of trade disruption as “very high”, far above other domains of the economy, and more than three-quarters also expect disruption to trade and global value chains to cascade into other domains.

In financial markets and monetary policy, 45% of surveyed economists rate disruption as high or very high, yet only 21% expect it to last. Even so, while 52% see a major near-term crisis in advanced economies as unlikely, 85% warn that any shock could have wide systemic effects.
 
With global public debt levels mounting, the chief economists who were surveyed highlight that debt vulnerabilities, once largely associated with emerging economies, are increasingly centred in advanced ones, with 80% expecting risks in advanced economies to grow in the year ahead.

Fiscal vulnerabilities are also more frequently identified among the top growth inhibitors in advanced economies, where 41% highlight them, compared with just 12% in developing economies.