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WEF: Economic outlook improves for 2024, but geopolitical woes remain

The the logo of the World Economic Forum displayed on a window at the Congress Center in Davos, Switzerland, Sunday, Jan. 14, 2024.
The the logo of the World Economic Forum displayed on a window at the Congress Center in Davos, Switzerland, Sunday, Jan. 14, 2024. Copyright Markus Schreiber/Copyright 2024 The AP. All rights reserved
Copyright Markus Schreiber/Copyright 2024 The AP. All rights reserved
By Indrabati Lahiri
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Although the United States and Asia are expected to see decent growth, European prospects remain bleak.

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The World Economic Forum (WEF) released its latest Chief Economists outlook on Wednesday, which surveys top economists from both the private and public sectors.

According to 82% of chief economists, the global economy is likely to become more robust, or at the very least, stay the same in 2024. This is nearly twice as many as was seen towards the tail end of 2023. On the other hand, the percentage of chief economists betting on worldwide conditions worsening plunged from 56% in January 2024, to 17% in May.

More than two-thirds of chief economists also expect global growth to be boosted significantly by artificial intelligence, technological transformation and the green transition.

However, geopolitical tensions and regional politics are still expected to drive volatility both in markets and the wider economy, with 97% of those surveyed believing that geopolitics will be a key factor increasing economic volatility worldwide in 2024.

This year is also a milestone because of the sheer number of domestic and regional elections being held, with almost 50% of the global population going to the polls. Some 83% of chief economists believe that these elections and the surrounding domestic politics will result in a major increase global volatility this year.

Saadia Zahidi, managing director of the World Economic Forum said in statement, “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.”

Expectations of growth for the United States, but Europe still lags behind

Coming to growth forecasts for the year ahead, the United States has the most optimistic outlook, with 97% of economists expecting the country to see considerable growth. Some 78% of respondents also expect moderate or lower inflation in 2024 in the US.

Similarly, most Asian economies are also likely to do well, with 100% of respondents expecting South Asia to see good growth, and 75% of them also believing that inflation could be on its way down in these regions this year.

For East Asian and Pacific economies, the outlook is even brighter, with 100% of survey respondents voting for stronger growth and falling inflation in 2024. However, only 79% of chief economists feel that China is likely to see moderate or strong growth this year, although all of them think inflation will drop further.

In contrast, Europe still has a distinctly dampened outlook, with only 31% of chief economists expecting the continent to see growth this year. However 82% of respondents did believe that inflation was likely to come down further in 2024.

Monetary policy and overall economic health likely to be key factors impacting business decisions

Apart from domestic elections and wider geopolitical tensions, businesses are also likely to keep a closer look on the overall health of the economy before making any major decisions.

According to 86% of respondents, monetary policy is a key factor likely to impact corporate decision-making, whereas the same number also cited financial markets as being a concern. Labour market conditions are an important consideration, according to 79% of chief economists.

However, 37% of economists felt that individual companies’ social and environmental objectives could be a driving factor for business decisions, while 73% felt that corporations’ growth objectives play a bigger role.

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