Global economic prospects have deteriorated sharply in recent weeks, according to the latest edition of the World Economic Forum’s Chief Economists’ Outlook. Nearly nine out of ten chief economists surveyed expect global growth to weaken over the next 12 months, reversing the cautious optimism seen at the beginning of the year, as conflict in the Middle East and the closure of the Strait of Hormuz fuel fears of a major global economic shock.
Chief economists now view the current duration of the Strait of Hormuz closure as significantly more disruptive than last year’s tariff-related turbulence. If the closure extends into the second half of the year, they believe its impact could approach the severity of the COVID-19 crisis, triggering knock-on effects across global supply chains as well as energy and food costs. An overwhelming 94% of respondents expect global inflation to rise over the coming year.
“Just a few months ago, the community of chief economists was cautiously optimistic. The conflict in the Middle East has changed that, and the economic scars from the situation so far are already expected to persist in the months ahead,” said Saadia Zahidi, Managing Director of the World Economic Forum. “The longer the disruption lasts, the greater the long-term cost for those least able to afford it.”
An Uneven Regional Outlook
The consequences are expected to be particularly severe in the Middle East and North Africa region. After being viewed only a few months ago as one of the world’s most dynamic economic regions, 88% of surveyed chief economists now expect weak or very weak growth there, representing the largest regional downgrade in the study.
Elsewhere, the outlook is mixed. Inflation expectations have risen sharply in Sub-Saharan Africa, which now records the highest levels among all regions, while Europe faces increasing stagflation risks amid weak growth and rising inflationary pressures. In contrast, India and the United States are showing greater resilience, supported by domestic demand and investment.
Low Recession Risk, but High Volatility
Despite the significant deterioration, the survey does not point to a major recession. Most chief economists do not expect a recession over the next 12 months, although neither do they foresee a clear improvement in economic resilience in the near term.
Developments will depend largely on the duration of the disruption: a short-lived shock could allow for recovery, whereas a prolonged closure would intensify pressure on the global economy.
Financial markets are also expected to face increased stress. A total of 79% of respondents anticipate greater volatility in private debt markets over the next year amid signs of strain in private credit. Meanwhile, 74% expect higher volatility in government bond markets and 68% foresee increased volatility in equity markets.
Optimism on AI, but More Measured
Artificial intelligence continues to act as a positive force for the global economy, with 92% of chief economists expecting greater AI adoption over the next year.
However, optimism regarding the speed of productivity gains from AI adoption has become more restrained. Significant productivity improvements are now expected to take longer to materialize across almost all sectors compared with forecasts made in January 2026.
Only the information technology and education sectors maintain stable expectations, while the largest delays in productivity gains are expected in engineering, construction, utilities, healthcare, and care services.
