Weak 2024 Economy Ahead of WEF?

 

Despite market enthusiasm, the global economy is expected to get weaker amid uncertainty this year although South Asia, Central Asia, and East Asia and Pacific is expected to do better.

The main factors worsening the economic conditions are:
 

• Ongoing geopolitical conflicts

• Tight financial conditions

• The rise of AI

The above is the main crux of a recent study conducted by the World Economic Forum (WEF) ahead of its 54th annual meeting being held in Davos during 15- 19 January 2024.

Titled the ‘Chief Economists Outlook,’ the report drew its findings through consultations and a survey conducted with the WEF’s Chief Economists Community.

56% of the economists expect the global economy to weaken in 2024. However, regional variations vis-à-vis economic outlook vary.
 

• 77% say Europe is going to suffer quite a weak growth this year.

• 43% expect a weak growth in the United States.

• 31% say the same about China, a rather cautious perspective.

• The opinion is nearly the same for the Middle East and North Africa (MENA), Latin America and the Caribbean, and sub-Saharan Africa.

• Meanwhile, South Asia (7%), Central Asia (16%), and East Asia and Pacific (15%) are likely to escape the negative trend, with only a small number of economists expecting a weak growth in these regions.

 

69% of the economists expected geoeconomic fragmentation to accelerate this year.

Over the next three years:

• 86% expect localisation of economic activity.

• 80% expect geoeconomic blocs to emerge.

 

The opinions of economists vary highly regarding the impact of generative AI across high-income and low-income economies.

• 79% expected an increase in efficiency of output production in high-income economies; only 38% expected so in low-income economies.

• 74% expected an acceleration of innovation due to AI in high-income economies; the figure dropped to 31% when it came to low-income economies.

 

European Markets Dip: Economic Slump to Continue?

The broader negative outlook about Europe reflected in the stock markets of the continent on Monday. All the leading national indices, except Russia, recorded drops as the WEF meeting kicked off.

 

Source: CNBC/Europe Markets

The U.S. market remained closed on Monday on the occasion of Martin Luther King Jr. Day.

Most of the surveyed economists were positive about labour markets and financial conditions relaxing this year, with inflating easing - but none expected a significant economic growth in any region.

“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, inclusive economic growth,” said Saadia Zahidi, managing director, WEF.