Onome Amuge
The global economy is heading into a period of prolonged weakness and fragmentation as once-stable growth engines falter and systemic disruptions in trade, technology and fiscal policy reshape the economic order, according to the World Economic Forum’s latest Chief Economists’ Outlook.
The report, published on Thursday, warns that the “post-2008” global growth model, initially built on integrated trade flows, accommodative monetary policy and a stable institutional framework, is losing coherence. More than 70 per cent of chief economists surveyed expect global growth to weaken in 2026, citing structural headwinds rather than cyclical slowdowns.
The shift, they argue, is not just another downbeat forecast but a signal that the economic architecture underpinning decades of expansion is being redrawn.
“The contours of a new economic environment are already taking shape. Disruption across trade, technology, resources and institutions is no longer a temporary condition — it is the new baseline,” said Saadia Zahidi, managing director at the WEF.
A central theme of the report is the deepening divergence between advanced and emerging economies, perceived as a structural fault line that could shape the next decade. More than half (56 per cent) of chief economists expect this divergence to widen over the next three years, with the Middle East and North Africa (MENA), South Asia and parts of East Asia emerging as the main engines of global expansion.
One in three respondents forecast strong or very strong growth in these regions, supported by demographic tailwinds, infrastructure investment and the digitalisation of services. India and Gulf economies are among those expected to outperform, underpinned by robust domestic demand and significant capital inflows.
By contrast, the outlook for the developed world is subdued. In Europe, 40 per cent of economists expect weak growth, while nearly three-quarters predict governments will loosen fiscal policy to counter sluggish demand. Inflation is expected to remain low or moderate for most of the continent.
The United States faces a more complicated scenario. This is as 52 per cent of respondents anticipate weak or very weak growth and nearly 60 per cent see inflation remaining high, even as monetary policy is loosened by the Federal Reserve.
China ,long a key driver of global growth, is expected to post moderate expansion. Yet concerns over persistent deflationary pressures and slowing domestic demand have dampened expectations, adding uncertainty to the global growth picture.
Perhaps the most visible sign of the shifting landscape is the upheaval in global trade. Seventy per cent of economists rated trade disruption as “very high”, far outpacing other areas of the economy; with more than three-quarters expecting it to cascade into other domains such as finance, labour markets and technology.
The restructuring of global value chains, spurred by geopolitical tensions, the weaponisation of trade policy and the reshoring of strategic industries, is seen eroding the efficiency gains that underpinned globalisation’s golden era.
While companies and governments are investing heavily to build resilience into supply chains, economists warn that this transition will come at a cost. “Fragmented trade flows are likely to mean higher input costs, slower innovation diffusion and, ultimately, lower potential growth,” said one European chief economist involved in the survey.
The WEF report also points to a reversal of debt risk, one of the global economy’s long-standing fault lines. Historically concentrated in emerging markets, debt vulnerabilities are now increasingly centred in advanced economies, where decades of fiscal expansion, pandemic-era stimulus and ageing populations are straining public finances.
80 per cent of respondents expect debt risks in advanced economies to grow in the next year. Fiscal vulnerabilities were identified as a top growth inhibitor in 41 per cent of advanced economies, compared with just 12 per cent of developing ones.
The warning comes as global public debt levels remain near record highs. The IMF estimates total government debt at around 93 per cent of global GDP, with advanced economies accounting for most of the increase since the pandemic. The US fiscal deficit, projected at 6.3 per cent of GDP in 2025, and the eurozone’s struggles to rein in spending underscore the scale of the challenge.
While few economists foresee an immediate debt crisis, with 52 per cent saying a major near-term shock is unlikely, 85 per cent warned that any disruption could have systemic consequences. With central banks expected to ease monetary policy, borrowing costs may fall slightly, but the longer-term sustainability of fiscal trajectories remains in question.
A striking feature of this year’s Outlook is the consensus that the current disruptions are structural rather than cyclical.
Concerning natural resources and energy, 78 per cent of economists anticipate long-term disruption as the energy transition upends commodity markets and geopolitical competition intensifies over critical minerals.
In terms of technology and innovation, 75 per cent expect significant structural shifts as artificial intelligence, automation and digital platforms reshape labour markets and productivity dynamics.
Per global institutions, 63 per cent foresee persistent disruption to global governance frameworks, reflecting the erosion of multilateralism and the rise of regional blocs.
This transition, Zahidi, the WEF MD said, demands new forms of leadership and cooperation to transform short-term turbulence into long-term resilience.
