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Global economic prospects remain fraught with uncertainty, economists say

Global economic prospects remain fraught with uncertainty, according to the latest Chief Economists’ Outlook released by the World Economic Forum (WEF) on Monday.

The report was presented at the 54th WEF Annual Meeting on the theme of “Rebuilding Trust,” currently being held in Davos from Jan. 15 to Jan. 19.

More than half of chief economists, 56 percent, expect the global economy to weaken in 2024, the report said. Meanwhile, a strong majority have predicted loosening labor markets and financial conditions in the coming year.

The report said that although expectations of high inflation have been pared back in all regions, regional growth outlooks vary widely, and no region is slated for very strong growth in 2024.

The global economy continues to grapple with headwinds from tight financial conditions, the report highlights, as well as geopolitical rifts and rapid advances in generative artificial intelligence (AI).

Around seven in 10 chief economists expect the pace of geoeconomic fragmentation to accelerate this year, with a majority saying geopolitics will stoke volatility in the global economy.

“The latest Chief Economists’ Outlook highlights the precarious nature of the current economic environment,” said Saadia Zahidi, managing director of the WEF.

“Amid accelerating divergence, the resilience of the global economy will continue to be tested in the year ahead. 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,” she said.

The WEF’s Global Risks Report 2024 anticipates that economic uncertainty will weigh heavily across most markets, but capital will be the costliest for the most vulnerable countries.

The World Bank has warned in its latest “Global Economic Prospect” for 2024 that the global economy is on track for its worst half-decade of growth in 30 years, as higher borrowing costs and geopolitical tensions weigh on output.

Global growth is expected to slow to 2.4 percent, before rising to 2.7 percent in 2025, said the multilateral organization. “If the predictions are accurate, it would mark the third year in a row where growth would prove weaker than the previous 12 months.”

As for regional variations, the chief economists’ report also showed that the outlook in Europe has weakened significantly since the September 2023 survey. The share of respondents expecting weak or very weak growth has almost doubled to 77 percent, while in the United States, the Middle East and North Africa the outlook is also weaker.

The report noted that 69 percent of respondents expect moderate growth for China. WEF President Borge Brende has said in an interview with Xinhua that China will continue to be a major engine for global economic growth, and has enough policy tools to revitalize its economy.

As the second-largest economy in the world, China can contribute to rebuilding trust due to its significant economic and trade heft, as well as its desire to build a more peaceful world, Brende said. “The steps that China takes are incredibly important for the world.”

China, as an important global economic and political player, has a key role in promoting international security and cooperation, Deloitte China Chair Jiang Ying told Xinhua. China’s economic growth has a significant impact on the global economy, she added.

China can create more opportunities for global economic growth and employment by further opening up its market and promoting international trade and investment, she explained. At the same time, China’s large-scale infrastructure projects, such as the Belt and Road Initiative, also help promote economic development and employment in countries along the routes, Jiang said.

Achieving security and cooperation in a fractured world is one of four key themes of the annual meeting. Klaus Schwab, founder and executive chairman of the WEF, called on the international community to rebuild trust, and take strong and effective global measures to invigorate the ailing world economy.

Famagusta Gazette