Economic Growth

3 reasons to be optimistic about the economy in 2024

While 56% of chief economists think the economy will weaken in the coming year, there are some bright spots.

While 56% of chief economists think the economy will weaken in the coming year, there are some bright spots. Image: World Economic Forum/Sandra Blaser

Stéphanie Thomson
Writer, Forum Agenda
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Economic Progress

This article is part of: World Economic Forum Annual Meeting
  • Davos 2024, the Annual Meeting of the World Economic Forum, takes place from 15–19 January in Davos, Switzerland.
  • The ‘Chief Economists Briefing’ session at the meeting saw leading economists discuss the emerging economic landscape and the decisions that lie ahead for policy-makers in 2024 and beyond.
  • While 56% of chief economists think the economy will weaken in the coming year, there are some bright spots.

What’s next for the global economy? These types of predictions are difficult to make at the best of times. Amidst historic levels of uncertainty, it becomes even tougher.

According to Forum research, 56% of chief economists think the economy will weaken in the coming year. But 43% predict conditions will either stay the same or improve.

“There are very divergent views,” World Economic Forum Managing Director Saadia Zahidi told participants at the Annual Meeting, during a media briefing with leading economists from around the world to discuss the emerging economic landscape and the decisions that lie ahead for policy-makers in 2024 and beyond.

What, then, is providing some optimism? Here’s what three economists in Davos said is giving them hope for the economic outlook over the coming year.

Green growth

For Ludovic Subran, Chief Economist at Allianz SE, one of the bright spots for 2024 is the potential offered by green growth: the transition to a more sustainable economy. “Even if it is ignited by public money, I think there is so much to do,” he told participants in Davos. “I’m very positive on this; we’ve already seen so many innovations come to the market.”

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Already in 2023, government and private sector investments in green technologies were providing a boost to some economies, such as in the US. But the green transition offers big opportunities beyond this coming year. For example, according to the Global Risks Report 2024, the green transition is estimated to lead to more than 30 million jobs by 2030. And research from Arup and Oxford Economics found that by 2050, companies and industries facilitating the net-zero transition could be worth more than $10 trillion — around 5% of GDP.

Innovation

For Karen Harris, Managing Director in the Macro Trends Group at Bain & Company, it’s still unclear if countries are heading for recessions or soft landings, but either way, growth will likely be less than impressive. “It’s not going to be a flawless economy under any circumstances,” she told participants.

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But when asked to share what gave her hope for the coming year, she pointed out that short-term GDP growth figures tell just a small part of the story. In fact, the innovation she is seeing happening across industries and companies makes her very optimistic. “The innovation that’s happening below the thatch layer, that’s nothing to do with what’s happening at the GDP level,” she explained. “Nobody says: ‘Well, I had this great idea, but GDP is down 50 basis points, I guess I’ll give up.’ And that is always the cause for optimism.”

Regional bright spots amid fragmentation

Around 70% of respondents in the World Economic Forum’s latest Chief Economists Outlook said they expect the pace of geoeconomic fragmentation to accelerate this year; 87% of respondents say this fragmentation will stoke volatility in the global economy.

Mario Mesquita, Chief Economist at Itaú Unibanco SA, expects some countries will weather these storms better than others. “I think economies like India and Mexico should perform OK this year,” he told participants. “I think they will be a source of support for global growth.”

For example, Mexico could benefit from trends like near-shoring, where companies move parts of their business operations to nearby countries rather than those further away. “Mexico was poised to grow a lot after NAFTA was signed, but it was more or less at the same time that China joined the WTO, so when it started to gain market share in the US, China then took that market share. So they are now on the opposite side of that movement. And they are likely to benefit.”

The session ‘Chief Economists Briefing’ was moderated by Saadia Zahidi Managing Director, World Economic Forum, with the following participants:

Karen Harris, Managing Director, Macro Trends Group, Bain & Company Inc.

Mario Mesquita, Chief Economist, Itaú Unibanco SA

Ludovic Subran, Chief Economist, Allianz SE

Click to watch the full session:

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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Economic GrowthForum InstitutionalGeo-Economics and Politics
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