WEF's Chief Economists expect global economy to stabilise

The World Economic Forum's Chief Economists have forecast a stabilization of the global economy, although fiscal support that aided recovery since 2020 is unlikely to be as effective in the coming year. A majority (56%) of respondents predict a stable or improving global outlook, marking a significant shift from May, when 89% anticipated worsening conditions. However, only 25% foresee enhanced resilience in the global economy.

Geopolitical conflicts are the primary source of uncertainty for the next year, cited by nearly all respondents (97%). Asset-price corrections are expected by 58%, while only one-quarter anticipate increased economic resilience. Chief Economist Attilio Di Battista highlighted that while fiscal support played a crucial role during past crises, government capacity for such support is likely to be constrained moving forward.

The focus now is on bolstering economic foundations for future resilience, with flexible supply chains, technological innovation, and energy-market adaptation emerging as key drivers. The United States and China are viewed as the most prepared to withstand economic shocks. Over the next year, 97% of respondents expect AI adoption to rise, with 69% anticipating meaningful productivity gains.

Approximately 78% predict data-center investment will significantly contribute to global growth, though 79% foresee substantial community opposition to such expansion.

Additionally, 61% do not anticipate data-center investment to create substantial job opportunities, with majorities expecting increased electricity (78%) and water (58%) prices due to the expansion. The AI competition between China and the United States is expected to intensify, with 69% anticipating Chinese large language models to match their US counterparts within a year.

Respondents predict rising living costs, primarily driven by food (88%), electricity (83%), and transport (77%). Most economists expect real incomes to either decrease or remain stagnant across most regions, except South-East Asia and India, where a majority anticipate increases in incomes.

Governments are expected to implement broad, visible measures such as tax reductions on essential goods (60%), consumption subsidies (54%), and price caps (50%). However, only 36% foresee tax reductions for low-income households and 26% expect targeted cash transfers. The International Monetary Fund (IMF) has raised its 2026 global growth forecast to 3.3% due to the anticipated AI surge. The world economy appears to be handling the US trade tariff storm relatively well, according to the OECD.