Top economists warn of slowing world economy, but some see surprise swing

Dubai: The global economy is sending mixed signals. On one side, the World Economic Forum (WEF) says the world is sliding into an era of weak growth and systemic disruption.

On the other, the OECD has upgraded this year’s global growth forecast, pointing to surprising resilience in the face of trade tensions and technological change.

The clash of views underscores one reality: while the short term looks steadier than many feared, the long-term path remains fragile.

New order take shape

The WEF’s Chief Economists’ Outlook, released this week, paints a stark picture. Nearly three-quarters of the world’s leading economists believe the global economy will weaken in 2026, shaped not by short-term shocks but by structural forces:

• Persistent trade disruption

• Ongoing technological shifts

• Strains on natural resources and energy

• Weakening global institutions

Saadia Zahidi, Managing Director at WEF, warned that these disruptions are already redrawing the map of global growth.

“The contours of a new economic environment are already taking shape… Leaders must adapt with urgency and collaboration to turn today’s turbulence into tomorrow’s resilience.”

World splitting in two

The report also highlights a widening gap between rich and poor nations. Emerging markets are expected to power ahead, while advanced economies remain stuck in the slow lane.

• MENA, South Asia and East Asia-Pacific are viewed as the brightest growth spots, with one in three economists forecasting strong expansion.

• China is expected to manage moderate growth, but deflationary risks loom.

• The United States faces weaker growth and lingering inflation pressures, despite looser monetary policy.

• Europe looks set for stagnation, cushioned only by fiscal support.

More than half of economists surveyed believe these divergences will sharpen further over the next three years, reshaping trade and investment flows.

Short-term growth

In contrast, the OECD has lifted its 2025 global growth forecast to 3.2%, up from 2.9% just months ago. The rebound, it said, reflects an economy that has absorbed the first wave of US President Donald Trump’s tariffs more smoothly than anticipated.

Two unexpected factors supported growth:

• “Frontloading” of trade — companies rushed to import goods before tariffs hit.

• AI-driven investment in the US and Chinese government spending, both of which propped up demand.

“The economy proved more resilient than anticipated,” the OECD said. Still, it cautioned that the full effects of tariffs are yet to be felt, with signs already emerging in consumer prices, labour markets, and corporate margins.

Debt time bomb

Both reports agree on one risk that is hard to ignore: rising debt in advanced economies.

• 80% of WEF economists expect debt vulnerabilities to worsen in rich countries in the coming year.

• Fiscal strains, once mainly a developing world problem, are now cited as a key growth inhibitor in advanced markets.

That leaves governments with limited room to respond if another shock strikes.

Resilience for now

Taken together, the WEF and OECD reports capture the paradox of the global economy: a short-term outlook stronger than feared, but a long-term trajectory clouded by disruption.

Emerging markets look set to carry much of the growth burden. Advanced economies may struggle with high debt, weak productivity, and structural realignments. And as trade, technology, and energy systems fragment, businesses and policymakers will be forced to adapt to a more volatile landscape.

For now, resilience has bought time. But the turbulence ahead may test economies — and leaders — like never before.