The World Economic Forum released its latest Chief Economists Outlook on Friday. This report shows India will keep driving South Asia as the world's brightest growth region. This comes even as most global economists prepare for weaker economic conditions in 2026.
Global Sentiment Shows Modest Improvement
The survey published ahead of the annual WEF meeting in Davos next week reveals global sentiment has improved modestly since late 2025. However, uncertainty remains high. This uncertainty stems from several factors including high asset valuations, rising debt levels, geo-economic realignments, and the rapid deployment of artificial intelligence.
Nearly 53 percent of chief economists surveyed expect global economic conditions to weaken in the coming year. This marks an improvement from September 2025 when 72 percent held this view.
South Asia Emerges as Strongest Regional Performer
South Asia has emerged as the strongest regional growth performer. India plays a central role in this outlook. The report states clearly: "South Asia remains the brightest growth spot among emerging regions, with India anchoring the outlook despite mounting trade headwinds."
Two-thirds of respondents expect strong or very strong growth in South Asia. This represents a sharp improvement from just 31 percent in the previous edition of the survey.
India's Economic Fundamentals Remain Resilient
The WEF noted India's macroeconomic fundamentals stay resilient despite US tariffs on Indian exports. The Reserve Bank of India recently assessed India as having a "goldilocks" economy. This assessment points to 8.2 percent year-on-year real GDP growth in the September quarter alongside near-zero inflation.
India's reform momentum also received attention in the report. Progress includes reducing employment restrictions and a sharp acceleration in artificial intelligence adoption. Rising investments from US technology firms support this AI acceleration.
Artificial Intelligence Investments Expected to Boost Growth
Over one-third of respondents anticipate a significant positive impact from AI investments on growth over the next two years. The WEF stated this clearly in their findings.
Inflation expectations in South Asia have moderated. Over two-thirds of economists expect monetary policy to remain unchanged in the year ahead. About 85 percent do not anticipate major shifts in fiscal policy.
Three Defining Trends Shape Global Outlook
WEF Managing Director Saadia Zahidi identified three defining trends shaping the outlook for 2026. These include accelerating AI investment, debt levels approaching critical thresholds with unprecedented fiscal and monetary adjustments, and ongoing trade realignments.
Zahidi emphasized that governments and companies must navigate an uncertain near-term environment with agility. They must continue building resilience and investing in the long-term fundamentals of growth.
Survey Reveals Cautious Views on Cryptocurrencies and Gold
The survey reflected caution on cryptocurrencies. Sixty-two percent of respondents expect further declines after recent volatility. Nearly 54 percent believed gold may have peaked following its recent rally.
Regional Variations in AI Productivity Expectations
Expectations around AI-led productivity gains varied across regions. Roughly four-fifths of economists anticipate productivity improvements within two years in the US and China.
The information technology sector should lead AI adoption. Financial services, supply chains, healthcare, engineering and retail will likely follow quickly as fast followers.
Employment Impact of Artificial Intelligence
Two-thirds of respondents expect modest job losses from AI over the next two years. Views diverge over the longer term. Nearly 57 percent foresee net job losses over a decade. Meanwhile, 32 percent expect gains as new roles emerge.
Regional Growth Expectations for 2026
South Asia topped growth expectations with 66 percent anticipating strong or very strong performance. East Asia and the Pacific followed with 45 percent expecting strong growth.
The US outlook improved with 69 percent forecasting moderate growth. Europe remained the weakest region with 53 percent expecting weak growth.
China's outlook appeared mixed. Economists split between moderate, strong and weak growth expectations according to the report.
