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Challenges to making progress on more sustainable economic growth
The World Economic Forum (WEF) released its September “Chief Economists Outlook”, analyzing the main trends in the economic environment, and the factors that will influence its evolution based on to consultations and surveys of prominent chief economists from the public and private sectors.
Main findings of the report:
- Soft landing: Economic expectations about the global economy have begun to stabilize, despite the uncertainties and some continuing vulnerabilities. Among the positive aspects, the easing of inflation and interest rates stands out within an context in which low rates of economic growth, political volatility and geopolitical tensions between the US and China persist.
- 54% of economists surveyed expect the world economy to remain stable next year, 37% expect conditions to worsen and 9% expect the economy to strengthen.
- Eight out of 10 chief economists agree the US election result will have a significant impact on economic policy globally.
- Uneven growth by regions. As in the previous survey, the best economic performance in 2024 and 2025 is expected for the economies of South and East Asia (except for China where 40% of respondents expect weak or very weak growth). In the US, the outlook is positive with 90% of respondents expecting moderate or better than expected growth, while for Europe 75% of respondents expect weak growth. In Latin America and the Caribbean, more than two-thirds of economists foresee moderate growth in line with that forecast by the IMF (+1.9% in 2024 and +2.7% in 2025).
- Higher levels of public debt: The percentage of global public debt over GDP stood at 93.2% in 2023 from 84.2% in 2019. For most economists surveyed, the cost of public debt and debt levels represent a vulnerability to economic stability, and can undermine governments' efforts to promote growth, limiting the capabilities to face major structural challenges such as digitalization, decarbonization or increased defense spending. This increase in public debt and public spending has worsened in an intense electoral year in many countries and regions.
- According to the report, 3.3 billion people now live in countries that spend more on debt interest than on education or health.
- Challenges to making progress on more balanced economic growth: Policy makers will have the twin challenge of fostering economic growth through structural changes, without harming the environment and without leaving certain sections of society behind. In this sense, only 12% of Chief economists consider that policy makers are maintaining an adequate balance between economic growth and the rest of the public goals, being the lack of political consensus (lack of leadership), and the lack of global collaboration (prevalence of domestic interests and geopolitical tensions), the main obstacles to achieving more balanced economic growth.
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