AI to add to 'Precarious' Year Ahead for World Economy - Davos Survey

The global economy faces a year of uncertainty stemming from geopolitical strife, tight financing conditions and the disruptive impact of AI.

Conducted each year ahead of the World Economic Forum's (WEF) annual meeting in the Swiss resort of Davos, the survey polled 60-plus chief economists drawn globally from the private and public sectors attempts to sketch priorities for policymakers and business leaders.

The poll found that 56% of those surveyed expect overall global economic conditions to weaken this year, with a high degree of regional divergence. While majorities saw moderate or stronger growth in China and the United States, there was broad consensus that Europe would muster only weak or very weak growth.

The outlook for South Asia and East Asia and Pacific was more positive, with very high majorities expecting at least moderate growth in 2024.

Reflecting commentary from the world's top central banks suggesting that interest rates have peaked, a full 70% of those surveyed nonetheless expected financial conditions to loosen as inflation ebbs and current tightness in labour markets eases.

Artificial intelligence was seen making an unequal mark on the world economy: while 94% expected AI to significantly boost productivity in high-income economies over the next five years, just 53% predicted the same for low-income economies.

Jason Kurtz, CEO, Basware, commented: “With businesses grappling high interest rates, inflation, and geopolitical tensions,  it’s already clear that this will be a challenging year for many organisations. However, top of the boardroom agenda should be accelerating automation to streamline core processes like finance and sales, to improve supply chains and deliver genuine value to the bottom line. The study from the World Economic Forum that shows 94% expect AI to significantly boost productivity in high-income economies is welcomed. It’s vital that business leaders look closely at the benefits AI can have for overhauling complex manual back-office processes that could easily be automated, freeing up valuable staff time and reducing overheads for the long term.”

Derek Mackenzie, CEO at Investigo, part of The IN Group, said: “Against the backdrop of a tougher economic climate, building a robust digital talent pipeline to stay ahead of the curve on AI and cyber skills should be a top priority for industry leaders.

“These technologies are already having a seismic impact on the way organisations operate, transforming traditional IT functions and requiring a whole host of new skills to ensure companies remain compliant. Getting access to staff with the latest skills and qualifications in this area is an essential step to staying ahead of the competition,” he added.

Separately, the WEF released a study on the "quality" of economic growth across 107 economies that concluded that most countries are growing in ways that are neither environmentally sustainable nor socially inclusive.

"Reigniting global growth will be essential to addressing key challenges, yet growth alone is not enough," said Saadia Zahidi, Managing Director, World Economic Forum.

The WEF said it was launching a campaign to define a new approach to growth and help policy-makers balance it with social, environmental and other priorities.