Global economy 'fraught with uncertainty,' expected to slow: Davos survey

A majority of economists believe economic activity will slow down in 2024, according to a World Economic Forum , citing global conflicts and the stresses of long term deflationary efforts. “Global economic prospects remain subdued and fraught with uncertainty,” the report reads. “While there are positive developments, such as easing inflationary pressures and advances in the field of artificial intelligence (AI), businesses and policy makers face persistent headwinds and continued volatility as global economic activity remains slow, financial conditions remain tight and geopolitical rifts and social strains continue to grow.” The survey of 30 top economists said 56 percent expect the global economy to weaken.

Europe is in the worst shape regionally, according to the economists, with 77 percent saying a slowdown is likely. Just less than half, 43 percent, said the same for the U.S. economy, while 13 percent also expect high inflation in the country this year. The survey marks a similarly dim outlook to the released earlier this month.

The World Bank projected that the global economy will slow for a third straight year in 2024, with the U.S. economy shrinking to 1.6 percent, down from about 2.5 percent in 2023. That report also predicted Europe will have a more difficult year. In the World Economic Forum report Monday, economists showed some optimism on inflation.

Few expect high inflation globally, amid positive signs that deflationary efforts from the Federal Reserve and foreign banking systems are working. U.S. inflation last month, according to Labor Department data, down from 6.4 percent last January. But overall, the economists had negative sentiments. Nearly 90 percent said volatility in the global economy is set to increase over the next three years, and 80 percent predicted increased volatility for stock markets.

“Although the results reveal signs of cautious optimism, including easing of inflationary pressures and AI enabled productivity benefits, growth momentum remains tepid, and a majority expect the pace of geoeconomic fragmentation to accelerate this year,” the World Economic Forum said..