World Economic Forum economists expect global economic conditions to weaken in 2026

Global economic conditions are expected to weaken, according to World Economic Forum chief economists. Despite this, the outlook has improved modestly. Artificial intelligence, mounting debt, and shifting trade patterns present both challenges and opportunities. Economists anticipate productivity gains from AI in the US and China within two years. Regional growth expectations vary, with South and East Asia showing strong momentum.

Davos: Around 53 per cent of World Economic Forum chief economists who were surveyed expect global economic conditions to weaken in the year ahead, down from 72 per cent in September 2025, even as they acknowledge the relative resilience of the global economy amid turbulence.

The global economic outlook has improved modestly but remains uncertain, with asset valuations, mounting debt, geoeconomic realignment and rapid artificial intelligence deployment creating both opportunities and risks, according to the World Economic Forum's latest Chief Economists' Outlook, published on January 16.

Although 53 per cent of chief economists expect global economic conditions to weaken in the year ahead, this marks a significant improvement from the 72 per cent who held this view in September 2025.

Uncertainty around technology remains high, with 52 per cent expecting AI-related stocks to decline and 40 per cent expecting gains.

When it comes to the potential expected returns from AI, there is wide variation across regions and sectors. Roughly four in five chief economists expect productivity gains within two years in the US and China. Chief economists expect the information technology sector to adopt AI fastest, with nearly three-quarters anticipating imminent productivity gains. Financial services, supply chain, healthcare, engineering and retail follow as "fast-movers", with one to two-year timelines.

On growth, expectations diverge by region, with economists expecting strong momentum in South Asia and East Asia and weak to moderate growth in Europe.

On macroeconomics, nearly a third of respondents are concerned about sovereign debt crises in advanced economies and nearly half in emerging economies; over 60 per cent expect governments to rely on higher inflation and tax revenues to manage elevated debt.

"The Chief Economists survey reveals three defining trends for 2026: surging AI investment and its implications for the global economy; debt approaching critical thresholds with unprecedented shifts in fiscal and monetary policies; and trade realignments," said Saadia Zahidi, Managing Director, World Economic Forum.

"Governments and companies will have to navigate an uncertain near-term environment with agility while continuing to build resilience and invest in the long-term fundamentals of growth," Saadia Zahidi added.

Global trade and investment are adjusting to a new, competitive reality.

Chief economists expect import tariffs between the US and China to remain mostly stable, though competition could intensify in other domains. Some 91 per cent expect US tech export restrictions to China to remain or increase; 84 per cent anticipate the same for Chinese critical mineral restrictions.

In this new context, 94 per cent of chief economists expect more bilateral trade deals and 69 per cent anticipate growth in regional trade agreements.

The World Economic Forum's 56th Annual Meeting, taking place on 19-23 January 2026 in Davos-Klosters, Switzerland, will convene leaders from business, government, international organizations, civil society and academia under the theme, A Spirit of Dialogue.

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Source: EconomicTimes
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