Report presented at Davos: Global economy to weaken in 2024

The global economic outlook remains tempered and is surrounded by uncertainties, according to the Chief Economists Outlook report, published yesterday at the beginning of the World Economic Forum (WEF) in Davos. It notes that the global economy continues to face challenges arising from tight financial conditions, geopolitical tensions and the rapid evolution of generative artificial intelligence (AI).

According to the cited source, more than half of the chief economists surveyed (56%) anticipate a weakening of the global economy this year, while 43% predict that conditions will remain stable or improve. There is widespread belief that labor markets (77%) and financial conditions (70%) will become more relaxed.

Although expectations of high inflation have eased across all regions, growth forecasts vary significantly, with no region expected to post robust growth in 2024.

Saadia Zahidi, the director general of the World Economic Forum, said, according to tradefinanceglobal.com: "The latest Chief Economists Outlook report highlights the fragile state of the current economic climate. As the world faces increasing divergence, the resilience of the global economy will face new tests. Even though global inflation is falling, growth is slower, financial conditions are tight, global tensions and inequalities are rising, all of which underlines the urgent need for global collaboration to stimulate sustainable and inclusive economic growth."

In Europe, the outlook has deteriorated compared to the September 2023 survey, with the number of respondents now expecting weak or very weak growth almost double (77%). The outlook is also more pessimistic for the United States, the Middle East and North Africa, with about six in ten respondents predicting moderate or stronger growth this year (down from 78% and 79%, respectively).

• Geopolitical tensions and economic uncertainty

About 70% of chief economists surveyed anticipate an acceleration of geoeconomic fragmentation this year, with most agreeing that geopolitics will fuel volatility in the global economy (87%) and stock markets (80%), drive localization (86% ), will strengthen geoeconomic blocks (80%) and exacerbate the North-South divide (57%) in the next three years.

With governments increasingly using industrial policy instruments, there is almost unanimity in the expectation that these policies will remain largely uncoordinated at the international level, according to the quoted source.

While two-thirds of chief economists foresee industrial policies that will help the emergence of new growth areas and key industries, the majority express concern about rising fiscal pressures (79%) and disparities between higher-income economies and those with lower incomes (66%).

• Focus on artificial intelligence

The chief economists interviewed estimate that the benefits of AI (artificial intelligence) will differ significantly across income categories, with better expectations in high-income economies. A sizeable majority believe that generative AI will increase production efficiency (79%) and innovation (74%) in high-income economies this year.

Over the next five years, 94% expect these productivity gains to become economically significant in high-income economies, compared to just 53% for low-income economies.

Almost three-quarters of those surveyed (73%) do not anticipate a net positive impact on employment in low-income economies, and 47% are of the same opinion for high-income economies. Opinions are more mixed on the potential for generative AI to raise living standards and contribute to a decline in confidence, both outcomes being more likely in high-income markets.

• Peace in Ukraine, on the WEF agenda

More than 80 countries debated in Switzerland on Sunday to reach an agreement on the peace formula in Ukraine proposed by Ukrainian President Volodymyr Zelensky, but the co-organizers admitted that they are still far from ready to include Russia in these debates, reports AFP.

National security advisers from 83 countries participated in a fourth round of talks based on Zelenskiy's 10-point proposals for a just and lasting peace in Ukraine, nearly two years after Russia launched its military offensive against large scale, notes Agerpres.

The negotiations were co-chaired by the Ukrainian president's assistant Andriy Iermak, Zelensky's chief of staff, and the Swiss minister of foreign affairs, Ignazio Cassis. They took place in Davos, a day before the opening of the World Economic Forum.

"The goal is to prepare, to be ready to launch a process with Russia when the time comes," Cassis said during a press conference.

However, the Swiss minister said that so far neither Kiev nor Moscow were ready to take this step.

For his part, Iermak estimated that the negotiations were "open, constructive and detailed", on the key principles to reach "a global, just and sustainable peace for Ukraine".

Even if there are differences on how to get there, "we are very close on the great principles of independence, territorial integrity, sovereignty and norms of international law and the statutes of the United Nations", declared Iermak in a press conference.

Cassis emphasized the importance of the participation in the negotiations of Brazil, India and South Africa, members along with Russia within BRICS, specifying. "Their involvement is very important because they dialogue with Moscow and maintain a certain degree of trust in their relationship."

According to the Kremlin, quoted by Reuters, the talks in Davos regarding Ukraine's peace proposals will lead to nothing as long as Russia does not take part in them. "These are simply talks for the sake of talks," Kremlin spokesman Dmitry Peskov said when asked about this topic, adding: "This process cannot aim to achieve a specific result for an obvious reason - we don't we participate Without our participation, any discussions are devoid of any prospect of leading to any result".