Global Economic Outlook Shows Modest Improvement, AI Set to Transform Productivity
A fresh survey from the World Economic Forum reveals a cautiously brighter picture for the world economy. The proportion of chief economists expecting global conditions to weaken in the coming year has dropped significantly. It now stands at 53 percent, a notable decline from the 72 percent who held that pessimistic view back in September 2025.
AI Emerges as a Defining Force Amid Persistent Uncertainties
The latest Chief Economists' Outlook, published on January 16, points to artificial intelligence as a central trend for 2026. While uncertainty around technology remains high, with opinions split on AI-related stock performance, expectations for productivity gains are strong. Roughly four out of every five chief economists anticipate productivity improvements from AI within two years in both the United States and China.
The information technology sector is predicted to adopt AI the fastest. Nearly three-quarters of surveyed economists believe productivity gains in IT are imminent. Financial services, supply chain operations, healthcare, engineering, and retail are also identified as "fast-movers." These sectors are expected to see benefits within a one to two-year timeframe.
Regional Growth Diverges as Debt Concerns Mount
Economic expectations vary sharply by region. Economists forecast strong momentum for South Asia and East Asia. In contrast, Europe is projected to experience only weak to moderate growth in the period ahead.
On macroeconomic risks, debt is a major worry. Nearly one-third of respondents express concern about potential sovereign debt crises in advanced economies. The concern is even more pronounced for emerging economies, where nearly half of the economists see a risk. Over 60 percent expect governments to manage their elevated debt burdens by relying on higher inflation and increased tax revenues.
Trade Realignments and the Davos Agenda
Global trade and investment are undergoing a significant adjustment. Chief economists expect a new competitive reality to shape patterns. While import tariffs between the US and China are predicted to remain mostly stable, competition is likely to intensify in other areas.
A substantial 91 percent of economists expect US tech export restrictions on China to either stay the same or increase. Similarly, 84 percent anticipate the same trend for Chinese restrictions on critical minerals. In this evolving landscape, an overwhelming 94 percent foresee more bilateral trade deals, and 69 percent expect growth in regional trade agreements.
Saadia Zahidi, Managing Director of the World Economic Forum, highlighted the key trends. "The survey reveals three defining trends for 2026," she said. "These are surging AI investment and its global economic implications, debt approaching critical thresholds with major policy shifts, and ongoing trade realignments." Zahidi added that both governments and companies must navigate this uncertain near-term environment with agility while building long-term resilience.
These insights will inform discussions at the World Economic Forum's 56th Annual Meeting. The event is scheduled for January 19-23, 2026, in Davos-Klosters, Switzerland. It will bring together leaders from business, government, international organizations, civil society, and academia under the theme "A Spirit of Dialogue."
