Global Economy Stabilizing Amid Fiscal and Geopolitical Risks

The global economy is showing signs of stabilization, but tighter government finances, geopolitical tensions, rising living costs, and uncertainty surrounding artificial intelligence investment could limit the strength of the recovery, according to the World Economic Forum’s (WEF) September 2026 Chief Economists’ Outlook.

The report, published on September 22, found that 56% of chief economists surveyed expect global economic conditions to remain stable or improve over the next 12 months. That represents a sharp shift from May, when 89% expected conditions to weaken.

The improvement, however, comes with limited confidence in the durability of the recovery. Only 25% of respondents expect the global economy to become more resilient over the next year, while 97% identify geopolitical conflict as a significant source of uncertainty. Another 58% expect the possibility of asset-price corrections.

The survey was conducted among 36 chief economists between August 4 and 20, 2026.

Fiscal support loses room to play its previous role

Government spending was identified as a major source of global economic resilience following the shocks of recent years.

Sixty-nine percent of respondents said fiscal support had been an important factor supporting resilience since 2020. Looking ahead, however, only 28% expect fiscal support to play a similarly important role during the next 12 months.

The shift reflects growing constraints on public finances after governments used fiscal measures to respond to the COVID-19 pandemic, supply-chain disruptions, inflation and other economic shocks.

With less fiscal space available, economists expect resilience to depend increasingly on economic diversification and flexible supply chains, technological innovation and adaptation in energy markets.

The United States and China were considered the economies best positioned to withstand future shocks, with 74% of respondents rating the resilience of each economy as high or very high.

AI drives investment optimism but raises infrastructure concerns

Artificial intelligence remains one of the strongest sources of optimism in the global outlook.

Ninety-seven percent of chief economists expect AI adoption to increase over the next 12 months, while 69% expect the technology to generate meaningful productivity gains. Seventy-eight percent also expect data-centre investment to account for a significant share of global economic growth.

However, the rapid expansion of AI infrastructure is creating concerns over its broader economic impact.

Seventy-nine percent of respondents expect significant opposition from local communities to data-centre expansion. The concerns include pressure on electricity networks, water supplies and land use.

The survey found that 78% expect data-centre expansion to push electricity prices higher, while 58% anticipate upward pressure on water costs. At the same time, 61% do not expect data-centre investment to generate a significant share of global job creation.

The report also found growing uncertainty over the scale of AI investment required, with 42% of economists expecting overinvestment in AI infrastructure.

Trade adapts as global fragmentation increases

Geoeconomic fragmentation is also expected to deepen despite the improving global outlook.

Seventy-seven percent of respondents expect fragmentation to increase over the next year. More than half, or 55%, anticipate higher tariffs in the United States, while 43% expect tariff increases in Europe.

Economists nevertheless expect global trade to continue expanding. Sixty-seven percent anticipate an increase in global trade volumes, while 83% expect Chinese exports to markets outside the United States to rise.

The findings suggest that trade flows could increasingly be redirected rather than simply reduced as companies and economies adjust to changing tariff and geopolitical conditions.

Growth prospects remain uneven

The improvement in the global outlook is not evenly distributed across regions.

India, South-East Asia, Central Asia and the United States received some of the strongest assessments from respondents. China’s outlook weakened, with about one-third of economists expecting weak growth.

Europe improved modestly but remained the weakest major region in the survey, with 61% of respondents expecting weak or very weak growth.

Monetary policy is also expected to diverge. Seventy percent of respondents anticipate tighter monetary policy in Japan, compared with 53% in the euro area and 42% in the United States. In China, 49% expect monetary policy to become looser.

Rising household costs remain a major concern

The stabilization in the broader economic outlook is not expected to translate immediately into stronger household purchasing power.

Eighty-eight percent of chief economists expect food prices to rise over the next year, while 83% anticipate higher electricity costs and 77% expect transport costs to increase.

Most respondents expect real incomes to stagnate or decline across much of the world. South-East Asia and India are notable exceptions, with more than 60% of economists expecting real incomes to increase in both regions.

Governments are expected to respond primarily through broad-based measures. Sixty percent of respondents anticipate tax reductions on essential goods, 54% expect consumption subsidies and 50% expect price caps.

More targeted measures are expected to be less common, with 36% anticipating tax reductions specifically for low-income households and 26% expecting targeted cash transfers.

The World Economic Forum said the findings point to a global economy that has moved away from the deterioration anticipated earlier in the year, but remains exposed to shocks at a time when governments have less fiscal capacity to respond.

For policymakers and businesses, the report shifts the focus from crisis-driven fiscal intervention toward supply-chain flexibility, productivity gains, technological investment and energy-market adaptation as the next sources of economic resilience.