The global economic outlook is showing signs of stabilization, with leading economists expressing greater optimism despite persistent geopolitical tensions and cost-of-living pressures, according to the World Economic Forum (WEF).
In its September 2026 Chief Economists’ Outlook report, the WEF said uncertainty remains elevated, but expectations for global economic growth have improved significantly compared with earlier projections.
INFLATION MODERATES, BUT COST-OF-LIVING PRESSURES PERSIST
According to the report, 45% of chief economists expect global economic conditions to weaken over the next 12 months, a sharp decline from 89% in May. Meanwhile, 56% now anticipate an unchanged or stronger economic outlook.
Despite the improved outlook, ongoing geopolitical tensions and rising living costs remain major concerns for the global economy.
“On the upside, the global economy has proven remarkably resilient. The outlook for global trade is positive, and chief economists surveyed remain optimistic about the prospects of artificial intelligence (AI) driving technological progress and productivity gains,” the report read.
Inflation expectations have also moderated, with only 50% of surveyed economists anticipating an increase in global inflation over the coming year, down from 94% in May.
However, the International Monetary Fund (IMF) projects global headline inflation to rise from 4.1% in 2025 to 4.7% in 2026 before easing to 3.9% in 2027. The report attributed inflationary pressures partly to energy shocks affecting oil, gas, fertilizer, and food prices.
The WEF warned that households, particularly those with lower incomes, remain vulnerable to rising living expenses.
“Food (88%), electricity (83%) and transport (77%) are the household costs most widely expected to increase. Higher food costs would be particularly consequential for lower-income households and economies,” the report read.
It also cited a May 2026 World Bank update showing that a 46% monthly increase in urea prices contributed to an average 31% rise in fertilizer prices.
SOUTHEAST ASIA’S ECONOMIC GROWTH OUTLOOK STRENGTHENS
Meanwhile, economic growth expectations for Southeast Asia have improved, with 97% of surveyed economists anticipating moderate or stronger growth over the next 12 months.
Of these, 73% expect strong or very strong growth in the region, up from 69% in May.
“Country-level forecasts remain differentiated, with growth in 2026 projected at 4.7% in Malaysia, 7.5% in Viet Nam and 1.9% in Thailand, supported in varying degrees by technology-related exports and investment, and robust domestic demand,” the report read.
“Labour market expectations are also favourable, with 79% of respondents expecting unemployment to remain unchanged and 14% anticipating a decrease.”
However, inflation remains a challenge for Southeast Asia, with the regional inflation rate projected to reach 3.9% in 2026, up from 3.2% in the previous year.
Economists attributed the increase to higher global energy and food prices, alongside exchange rate pressures that “have raised import costs across the subregion.”
“At the same time, strong technology demand, firm household spending and resilient investment are helping to support regional activity, although renewed disruption could again raise energy and shipping costs,” the report said.
Elsewhere, the United States is expected to maintain moderate growth, supported by private consumption and technology investments.
China’s economic outlook, meanwhile, has softened as “resilient exports and high-tech manufacturing contrast with subdued consumption and investment”.
Europe remains the weakest major economic bloc, with 61% of economists expecting weak or very weak growth.
SHIFTING SOURCES OF ECONOMIC RESILIENCE AND UNCERTAINTY
Reflecting on the global economy’s recovery from the COVID-19 pandemic in 2020, surveyed economists identified fiscal support (69%) as a leading source of resilience, followed by economic diversification and flexible supply chains (67%), and technological acceleration and innovation (61%).
However, looking ahead to the next 12 months, only 25% of chief economists expect global economic resilience to strengthen.
“Geopolitical conflicts are the leading source of uncertainty, selected by 97%, followed by asset price corrections at 58%. Future resilience is expected to depend more on flexible supply chains, technology and energy market adaptation, while fiscal support falls sharply in expected importance as public finances constrain room to respond,” the report read.
Economists identified China and the United States as among the countries best positioned to withstand future economic shocks.
Other major sources of uncertainty include rapid technological change (44%), policy instability (44%), trade and investment restrictions (42%), extreme weather events (39%), and energy shocks (39%).
ARTIFICIAL INTELLIGENCE EMERGES AS KEY DRIVER OF ECONOMIC OPTIMISM
Artificial intelligence (AI) has emerged as a major source of optimism among chief economists, with expectations that its continued adoption could drive technological progress and productivity gains.
According to the report, nearly all surveyed economists (97%) expect AI adoption to increase over the next 12 months, while 69% anticipate meaningful productivity improvements.
“The technology race between China and the US is expected to narrow, with 69% expecting Chinese large language models (LLMs) to fully catch up to their US counterparts. Benefits from AI adoption are expected to manifest across all industries within the next three years, although digital sectors remain in the lead,” the report explained.
Despite this optimism, the rapid expansion of AI infrastructure is expected to face growing social and physical challenges.
A significant majority of economists (79%) anticipate strong opposition from local communities to the expansion of data centers, driven by concerns over higher electricity prices (78%) and increased water costs (58%).
Data centers are also projected to account for 55% of the forecast growth in US electricity demand over the next five years.
This rising demand is expected to stimulate global investment across several energy sources, with economists anticipating increased investment in nuclear energy (83%), renewable energy (80%), and fossil fuels (70%).
While economists remain optimistic about AI’s potential to strengthen the global economy, they also warn that its rapid expansion could bring higher utility costs, while its benefits for job creation may remain limited.
