Global Outlook Improves, but Debt and AI Risks Persist

Global economic sentiment is improving slightly, but concerns remain high among chief economists over elevated debt, asset price volatility, and geopolitical tensions, according to the World Economic Forum's January 2026 Chief Economists' Outlook. While 53 percent of economists expect global economic conditions to weaken over the coming year, this reflects a notable decline from the 72 percent who held that view in September 2025.

Saadia Zahidi, managing director at the World Economic Forum, said, "The Chief Economists survey reveals three defining trends for 2026: surging AI investment and its implications for the global economy; debt approaching critical thresholds with unprecedented shifts in fiscal and monetary policies; and trade realignments."

Sentiment around artificial intelligence (AI) remains divided. Fifty-two percent of respondents expect AI-related US stocks to decline over the next year, while forty percent foresee gains. Should AI valuations fall sharply, 74 percent anticipate global economic spillover effects. Most chief economists expect productivity gains from AI within 2 years, particularly in the US and China. The information technology sector is projected to see the fastest impact, followed by financial services, health care, and retail. Larger companies are expected to benefit first, with 77 percent of economists predicting productivity gains for firms with more than 1,000 employees.

Employment impacts from AI remain uncertain. Two-thirds of economists expect modest job losses in the next 2 years, but longer-term views diverge: 57 percent expect net losses over the next decade, while 32 percent expect gains as new jobs emerge.

Debt-related risks are escalating. Defense spending is expected to rise in nearly all regions, while environmental protection may face cuts. In advanced economies, 67 percent of economists expect governments to rely on higher inflation to manage debt, and 62 percent foresee tax increases. Debt restructuring or default is expected by 53 percent in emerging markets within 5 years, but only 6 percent see that occurring in advanced economies.

Geoeconomic tensions are also reshaping trade. Most economists expect US-China tariffs to remain steady, but restrictions on tech exports and critical minerals are expected to persist or grow. Nearly all respondents foresee an increase in bilateral and regional trade agreements. Eighty-nine percent expect Chinese exports to non-US markets to rise, and fifty-seven percent expect greater foreign direct investment into the US, compared to only nine percent for China.

Growth expectations vary significantly by region. South Asia leads, with 66 percent expecting strong or very strong growth, driven by India. East Asia and the Pacific are expected to perform moderately to strongly. The US outlook improved from the last survey, with 69 percent expecting moderate growth and 11 percent expecting strong growth. In contrast, Europe faces the weakest outlook, with 53 percent expecting weak growth and just 3 percent expecting strong performance.