Global economy set to stabilise, but fiscal pressures and AI uncertainty threaten growth
56 percent of surveyed economists expect a stable or improving outlook in the year ahead, a sharp improvement from May, when 89 percent expected conditions to weaken.
KAMPALA, September 22, 2026 — The global economy is showing signs of stabilisation, but tighter fiscal conditions, rising living costs and uncertainty over artificial intelligence [ AI ] investment could undermine growth over the next year, according to the World Economic Forum’s Chief Economists’ Outlook published on Tuesday.
Fifty-six percent of chief economists surveyed expect the global economic outlook to remain stable or improve, a significant improvement from May, when 89 percent expected conditions to weaken.
However, confidence in the durability of the recovery remains limited. Ninety-seven percent of respondents identified geopolitical conflicts as a likely source of uncertainty over the next year, while 58 percent expect asset-price corrections.
Only one-quarter of the economists surveyed expect the global economy to become more resilient.
“Chief Economists expect the global economy to stabilize, but uncertainty remains high with geopolitical volatility, potential asset-price corrections, greater scrutiny of AI investment and persistent cost-of-living pressures,” said Attilio Di Battista, Head of Economic Growth and Transformation at the World Economic Forum [WEF].
“Government support played a critical role in navigating successive crises, but fiscal capacity is likely to be more constrained going forward. The priority now is to strengthen the foundations of resilience before the next shock arrives.”
Fiscal support unlikely to sustain global resilience
Fiscal support has been the biggest source of resilience for the global economy since 2020, according to 69 percent of the economists surveyed.
However, only 28 percent expect fiscal support to play the same role over the next 12 months.
Instead, economists expect future resilience to depend increasingly on flexible supply chains, technological innovation and adaptation in energy markets. The United States and China are considered the economies best positioned to withstand future shocks.
AI investment boosts growth expectations but faces resistance
AI adoption is expected to accelerate, with 97 percent of respondents anticipating increased use of the technology over the next 12 months.
Sixty-nine percent expect AI to deliver significant productivity gains, while 78 percent believe data-centre investment will account for a significant share of global economic growth.
However, 79 percent expect the expansion of data centres to face significant opposition from local communities.
The investment boom is also expected to have mixed effects on employment and household costs. Sixty-one percent of economists do not expect data-centre investment to account for a significant share of global job creation, while 78 percent expect the expansion to increase electricity prices and 58 percent anticipate higher water prices.
The technology race between China and the United States is also expected to narrow, with 69 percent of respondents expecting Chinese large language models to catch up with their US counterparts over the next 12 months.
Geoeconomic fragmentation expected to deepen
Seventy-seven percent of economists expect geoeconomic fragmentation to increase over the next year.
Fifty-five percent anticipate higher tariffs in the United States, while 43 percent expect tariff increases in Europe.
Despite rising trade tensions, two-thirds of respondents expect global trade volumes to increase. Eighty-three percent also expect Chinese exports to markets outside the United States to rise.
The United States is expected to remain the most favourable business environment for multinational companies, followed by South-East Asia and Europe, both of which moved up one position. India fell to fourth place, while China remained fifth.
Growth prospects have improved across most regions but remain uneven.
India, South-East Asia, Central Asia and the United States received the strongest assessments. China’s outlook weakened, with about one-third of economists expecting weak growth.
Europe recorded a modest improvement but remained the weakest-performing region, with 61 percent of respondents expecting weak or very weak growth.
About one-third of economists expect unemployment to increase in the United States, China and Europe.
Monetary policy is also expected to diverge, with 70 percent of respondents anticipating tighter policy in Japan, 53 percent in the euro area and 42 percent in the United States. Meanwhile, 49 percent expect China to adopt looser monetary policy.
Rising living costs expected to erode incomes
The outlook for household costs remains a concern, with economists expecting increases in the prices of essential goods and services.
Food prices are expected to rise by 88 percent of respondents, followed by electricity at 83 percent and transport at 77 percent.
Most economists expect real incomes to either decline or stagnate across most regions. South-East Asia and India are exceptions, with more than 60 percent of respondents expecting real incomes to increase.
Governments are expected to rely mainly on broad measures to address rising living costs.
Sixty percent of respondents expect governments to reduce taxes on essential goods, while 54 percent anticipate consumption subsidies and 50 percent expect price caps.
By comparison, only 36 percent expect tax reductions targeted at low-income households, while 26 percent anticipate targeted cash transfers.
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