Global economic growth outlook weakens in WEF survey, while India leads expectations

A World Economic Forum survey of chief economists found rising concern about the world economy. Nearly nine in ten respondents expected global growth to weaken over the next year. Yet only 13 per cent thought a global recession was likely. India stood out as the geography with the strongest growth expectations in the survey.

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The latest Chief Economists Outlook linked the shift in sentiment to conflict in the Middle East. Economists said the closure of the Strait of Hormuz increased risks of a large global shock. The survey said this reversed the cautious optimism seen at the start of the year. Many also warned about wider disruption to trade and supply routes.

WEF survey flags global growth outlook as Strait of Hormuz disruption deepens

Nearly all respondents, or 94 per cent, expected global inflation to rise. They cited higher energy and food costs as key reasons. They also pointed to supply chain disruption from the Strait of Hormuz closure. Economists ranked the current closure duration as more disruptive than last year’s tariff turmoil.

The WEF said the impact could become much worse if disruption continues. Respondents said that if the closure lasts into the second half of the year, the damage may near the severity of the COVID-19 crisis. They expected compounding effects across global supply chains. They also expected stronger pressure on energy and food costs.

"Only months ago, the Chief Economists community was cautiously optimistic. The conflict in the Middle East changed that, and the economic scarring from the situation thus far is already expected to last into the months ahead,\" WEF Managing Director Saadia Zahidi said.

\"The longer the disruption lasts, the heavier the long-term cost for those who can least afford it,\" Zahidi added. The survey said the Middle East and North Africa region was expected to face the heaviest hit. Economists pointed to the region’s exposure to conflict. They also cited risks to trade, shipping, and investment conditions.

WEF survey sees India growth expectations strongest despite West Asia risks

India and the United States were expected to stay relatively resilient, the WEF said. It linked this to domestic demand and investment support. On India, the WEF said growth prospects continued to stand out. It said 52 per cent of surveyed chief economists expected strong or very strong growth.

The WEF also noted policy signals affecting India’s outlook. Early 2026 reporting pointed to a broader opening in trade policy. It also pointed to policy support for infrastructure, technology, and domestic capacity-building. The WEF said growth for 2026-27 was projected at 6.5 per cent.

Even with resilience, the WEF flagged rising risks for India from the Middle East conflict. It said depreciation pressures forced the central bank to shed USD 40 billion in foreign-exchange reserves in March. The WEF said this was done to stabilise the currency. It added that external shocks could still affect markets.

WEF survey highlights energy prices as key worry as Strait of Hormuz closure continues

On the business environment, the WEF said India offered a clear mix of scale, growth, and potential among large emerging markets. It said India kept opening channels for trade and capital. It also noted an active economic policy stance and widening market access. The WEF added that India entered new free trade agreements, including with the EU.

The WEF said energy prices were the main pressure point from the West Asia crisis. In most regions, energy prices were expected to rise. Economists repeatedly flagged energy cost increases as a major concern. Southeast Asia was expected to take the strongest blow, with 62 per cent expecting much higher prices.

Expectations for energy price increases were lower in some other regions. The share fell to 45 per cent in Europe, the survey said. It was 41 per cent in Japan. It was also 41 per cent in India, suggesting less severe price expectations than in Southeast Asia. The WEF survey still showed broad concern about spillover effects.

With inputs from PTI