The global economic outlook has deteriorated since the beginning of the year, with increasing economic nationalism and tariff uncertainties fuelling widespread concern. However, South Asia—led by India—is being viewed as a bright spot for growth, according to the latest Chief Economists Outlook released by the World Economic Forum (WEF).
The report reveals that a strong majority—79 per cent—of the surveyed chief economists see current geoeconomic developments as indicators of a major structural shift in the global economy, rather than just a temporary disruption. As trade tensions escalate and nationalism rises, these economists unanimously anticipate a difficult year for global growth.
Despite the overall gloom, growth expectations vary significantly across regions. South Asia, particularly India, remains the most promising. About 33 per cent of the surveyed economists expect strong or very strong economic growth from India this year, making it a rare point of optimism in an otherwise subdued global landscape.
In contrast, 77 per cent of the economists foresee weak or very weak economic performance in the United States through 2025. Concerns about persistent inflation and a weakening dollar are compounding the pessimism. Europe, however, is witnessing cautious optimism for the first time in years, with expectations of fiscal expansion—especially in Germany—offering hope. Meanwhile, China’s outlook remains uncertain, with economists divided on whether it can meet its target of 5 per cent GDP growth this year.
Commenting on the findings, Saadia Zahidi, Managing Director of the World Economic Forum, urged leaders to respond proactively. “Policymakers and business leaders must respond to heightened uncertainty and trade tensions with greater coordination, strategic agility and investment in the growth potential of transformative technologies like artificial intelligence,” she said.
The report also highlights that global uncertainty remains exceptionally high, with 82 per cent of the economists describing it as such. While 56 per cent believe conditions may improve in the next year, deep concerns persist. Nearly all respondents (97 per cent) cite trade policy as one of the areas of greatest uncertainty, followed closely by monetary and fiscal policy. This uncertainty is expected to impact critical indicators such as trade volumes, GDP growth and foreign direct investment.
In response to these conditions, many businesses are likely to delay key strategic decisions, thereby increasing the risk of recession. Additionally, debt sustainability is emerging as a significant concern. Around 74 per cent of economists flagged this issue for both advanced and developing economies. A vast majority also anticipate that rising defence expenditures will be financed through increased borrowing, which could divert funds away from essential public services and infrastructure.
The report places particular emphasis on artificial intelligence (AI) as a pivotal force in shaping future economic dynamics. Nearly half (46 per cent) of the economists expect AI to boost global GDP by up to five percentage points over the next decade through task automation, innovation acceleration and augmentation of human labor. However, the transformative potential of AI comes with substantial risks.
While 19 per cent of the respondents foresee job gains due to AI, nearly 47 per cent expect net job losses over the next ten years. The misuse of AI—especially for disinformation and societal disruption—was cited as the top economic risk associated with the technology. Other concerns include the concentration of market power and disruption to existing business models.
To fully harness AI’s promise, the report calls for bold action from both governments and the private sector. It recommends that governments invest in AI infrastructure, promote widespread adoption, support talent mobility, and prioritise upskilling and worker redeployment. Meanwhile, businesses are urged to adapt their operations, reskill employees, and prepare leadership teams to manage AI-driven change.
–IANS
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