Most leading economists expressed optimism about the global economy and said that South Asia is doing the best in the world, led by India's strong performance. This was revealed in a survey released on Wednesday. The World Economic Forum (WEF) said in its latest Chief Economist Outlook, "Decreasing inflation and strong global commerce are encouraging cautious confidence in recovery, but high debt levels in both advanced and developing economies are becoming a matter of concern." The report, based on a survey of leading chief economists around the world, underlined that debt levels and fiscal challenges are putting considerable pressure on economies around the world, making them vulnerable to future crises.

Fear of increase in default in developing economies

A growing concern is potential fiscal tightness, where rising debt-servicing costs prevent governments from investing in essential sectors such as infrastructure, education, and healthcare. 39 percent of economists in developing economies expect a rise in defaults next year, the WEF said. The survey found that nearly 90 percent of chief economists across sectors expect moderate or strong growth in the US in 2024 and 2025, reflecting confidence in a shift to easing after a period of tight monetary policy.

America's elections will impact the world

80 percent of those surveyed agreed that the outcome of the US election would significantly affect global economic policy. Many cited election-related risks as a major concern for the year ahead. In contrast, nearly three-quarters of respondents forecast weak growth in Europe for the rest of the year. China continues to struggle. Nearly 40 percent of economists forecast weak or very weak growth in both 2024 and 2025. 

India's growth is strong.

However, South Asia stood out, with more than 70 percent of economists forecasting strong or very strong growth in 2024 and 2025, driven by India's strong performance. "The strongest results in the latest survey are from parts of Asia. South Asia clearly stood out. Seven out of 10 leading economists expect strong or very strong growth there in 2024 and 2025," the WEF said. "This reflects the currently booming economic activity in India, where the International Monetary Fund (IMF) recently revised its forecast for gross domestic product (GDP) growth this year from 6.8 percent to seven percent," the survey said.

The global economy is becoming stable.

World Economic Forum Managing Director Saadia Zahidi said the global economy is stabilizing, but fiscal challenges still pose significant risks. "Coordinated efforts from policymakers and stakeholders are needed to address these challenges to ensure that economic recovery is not hampered by these pressures. Now is the time for pragmatic solutions that can strengthen both fiscal consolidation and long-term growth," she said.

The country is not prepared for future crises.

The survey highlighted that countries are not prepared for future crises due to limited fiscal space, particularly in developing economies (82 percent) as compared to advanced economies (59 percent). It cautioned that the rising debt burden not only poses a short-term threat to macroeconomic stability but also impacts countries' ability to tackle long-term challenges such as climate change, demographic shifts, and social cohesion.