New Delhi

Chief economists have expressed cautious optimism over the global economy, particularly highlighting India's robust performance that put South Asia at the top position globally, according to the latest survey by the World Economic Forum.

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A survey released last week by the World Economic Forum makes a series of noteworthy predictions and reveals easing inflation and strong global commerce as key drivers of the optimism for recovery; however, it also points out accelerating debt levels that challenge advanced and developing economies alike.

Brief history of World Economic Forum

The World Economic Forum (WEF) is an international non-governmental organization, think tank and lobbying organisation based in Cologny, Canton of Geneva, Switzerland. It was founded on 24 January 1971 by German engineer Klaus Schwab.

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The foundation, which is mostly funded by its 1,000 member companies, typically global enterprises with more than five billion US dollars in turnover, as well as public subsidies, states that its own mission is "improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas".

The Forum claims that a globalized world is best managed by a self-selected coalition of multinational corporations, governments, and civil society organizations (CSOs), which it expresses through initiatives like the "Great Reset" and the "Global Redesign". It states that it views periods of global instability such as the financial crisis of 2007–2008 and the COVID-19 pandemic, as windows of opportunity to intensify its programmatic efforts.

WEF Outlook

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According to a report detailed by the Press Trust of India, The WEF Chief Economists Outlook has revealed that the spectrum of debt and fiscal stress is only rising, which is making economists worried about the cost of servicing debt that will yield the starkest constraint on key investment areas such as infrastructure, education, and healthcare. In particular, 39 per cent of economists polled from developing nations expected a rise in defaults in the next year.

Regionally, almost 90 per cent of economists expect moderate to strong growth in the US over the next two years through 2025 while still confident that it will have a "soft landing" post-tight monetary policy. Europe is expected to be experiencing weak growth and China faces similar problems with nearly 40 per cent expecting weak or very weak growth over the next two years.

South Asia is very different. Over 70 per cent of economists are positive regarding the prospects for strong growth in 2024 and 2025, mainly due to India's performance. The International Monetary Fund recently adjusted India's GDP growth forecast from 6.8 per cent to 7 per cent, showing again the vibrancy of the region.

Further, according to Saadia Zahidi, WEF's managing director, the global economy enters 2024 with new signs of stabilization but fiscal challenges remain. The role of coordinated policy efforts in facilitating resilient recovery is perceived here to be quite important. The survey suggests limited fiscal space for facing future crises; developing economies are vulnerable to dealing with long-term challenges such as climate change and demographic shifts.