Jakarta, CNBC Indonesia – A number of world chief economists stated that the global economic outlook for 2024 will still be weak and full of uncertainty. This prospect is the result of a World Economic Forum (WEF) survey of world chief economists contained in the January 2024 edition of Chief Economists Outlook.
There were at least 30 respondents who responded to the survey. Half of the chief economists, or 56%, predict that the global economy will weaken this year, while 43% predict that conditions will not change or will strengthen from conditions in 2023.
According to the WEF, the chief economists' response is in line with the global economy continuing to grapple with obstacles ranging from tight financial conditions, geopolitical divisions, to the rapid progress of generative artificial intelligence (AI).
“The latest Chief Economist Outlook highlights the current economic conditions which are in a critical period,” said Saadia Zahidi, Managing Director of the World Economic Forum, quoted in a written statement, Monday (15/1/2024).
The majority of respondents or around 77% also believe that the labor market will be full of challenges. In 2024, 70%'s financial conditions will weaken. Although expectations of high inflation have reduced, as the growth prospects for countries in various regions vary widely and no region is expected to experience very strong growth in 2024.
“In the midst of accelerating economic divergence, the resilience of the global economy will continue to be tested in the future,” said Saadia.
The chief economists consider the economic prospects for South Asia and East Asia-Pacific to still be positive and generally unchanged compared to the previous survey, with respective response percentages of 93% and 86% stating moderate growth, with the remaining percentage considering the prospects to be weak.
China's outlook is an exception, with 69% of respondents expecting moderate growth as weak consumption, lower industrial production and concerns over the property market weigh on prospects for a stronger recovery.
In Europe, the outlook has weakened significantly since the September 2023 survey, with the number of respondents expecting weak or very weak growth almost doubling to 77%. The outlook is similar for the United States, the Middle East and North Africa, with around six in 10 respondents expecting growth to be moderate or stronger this year.
There were significant increases in growth expectations in Latin America and the Caribbean, Sub-Saharan Africa, and Central Asia, although views on growth remained generally moderate at 70%, 65%, and 84% respectively.
This uncertainty is exacerbated by the chief economists' projections of worsening geopolitical divisions among world countries. About seven in 10 chief economists expect the pace of geoeconomic fragmentation to accelerate this year.
87% of chief economists say geopolitics will trigger volatility in the global economy, and stock markets account for 80%. Then 86% thought there would be increased localization policies, 80% said there would be strengthening geoeconomic blocks, and 57% said there would be a widening of the economic gap between the North-South region and in the next three years.
“Most economists also warn of increasing fiscal pressures (79%) and differences between high- and low-income countries (66%),” he said.
However, the chief economists received positive sentiment about the existence of AI which has a good impact on the economy. 79% think that the existence of AI will increase production efficiency, and 74% think it will have an impact on innovation.
However, they also think AI will create new gaps between high and low income countries. 94% of respondents expect these benefits of AI in increasing productivity to be economically significant in high-income countries, compared to just 53% in low-income countries.
Nearly three-quarters (73%) do not expect a positive impact of AI on job creation in low-income countries and 47% think the same will happen in high-income countries.
“In addition, there are differing views on the likelihood of generative AI increasing living standards and decreasing trust, both of which are more likely to occur in high-income markets,” Saadia said.
[Gambas:Video CNBC]
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