Global Economic Uncertainty Persists Amid Technological Shifts

Global Economic Uncertainty Persists Amid  Technological Shifts

The global economy is expected to remain fraught with uncertainty throughout 2024, as reported by the World Economic Forum (WEF). According to the latest Chief Economists Outlook, just over half of the surveyed economists predict a weakening of the global economy this year. This sentiment is echoed by the International Monetary Fund (IMF), which forecasts a slight decline in global growth to 2.9% in 2024, down from 3% in 2023​ ​.

Geoeconomic Fragmentation

One of the primary drivers of economic volatility is the ongoing geopolitical tensions, which are anticipated to accelerate the pace of geoeconomic fragmentation. Nearly seven in ten economists believe that this trend will intensify, leading to increased volatility in global markets. This fragmentation is expected to manifest through greater localization, the strengthening of regional economic blocs, and a widening gap between the Global North and South. The IMF warns that increased trade restrictions could result in a potential loss of up to 7% in global economic output, with low-income economies bearing the brunt​ .

Regional Growth Dynamics

Growth patterns are expected to diverge significantly across different regions. South and East Asia are likely to continue experiencing robust economic activity, with China being an exception where growth is projected to be moderate. Conversely, the economic outlook in Europe has deteriorated, with expectations of weak or very weak growth over the next year. Similarly, growth forecasts for the US and the Middle East and North Africa have been revised downward​ .

Impact of Generative AI

The rise of generative AI technology is poised to be a significant disruptor in 2024. Since its emergence in late 2022, the potential applications of generative AI have expanded rapidly. By May 2023, economists were already noting the transformative impact AI could have on businesses and policymakers. The latest survey indicates that 50% of respondents expect generative AI to become disruptive by the end of 2024, suggesting a faster rollout compared to previous technological advancements. This technological shift could help offset some economic challenges in advanced economies​ .