Confidence in the state of the world economy firmed up in the fourth quarter, although a majority of respondents to the World Economic Forum’s Global Confident Index poll were still pessimistic. Amid some signs that the slowdown in China has bottomed out, 56 per cent of global experts polled said they lacked confidence in the global economy, sharply down from 72 per cent last quarter.
“The results are indeed an improvement from last quarter’s confidence levels, but sentiment overall remains pessimistic,” said Martina Gmur, Senior Director of the Forum’s Network of Global Agenda Councils. “We still need strategic vision coupled with bold leadership to snap out of this global malaise.”
In a poll of 460 experts, respondents in the Middle East and North Africa were significantly more confident about the global economy than those in North America, Europe, Asia and sub-Saharan Africa.
Reflecting sentiment in the run-up to the presidential elections in the United States and China’s political transition, respondents in North America were more worried about an upcoming economic shock than their counterparts in Asia. Some 63 per cent in the US and Canada judged this as likely or very likely versus 43 per cent in Asia.
“While the probability of a global recession is no greater than about 25 per cent, according to forecasts, three risks loom large: the US fiscal cliff, the eurozone sovereign debt crisis and the potential for an escalation of conflict in the Middle East and North Africa,” said Nariman Behravesh, Chief Economist at IHS and a member of the Global Agenda Council on the United States.
Overall, the number of respondents worried about an economic jolt fell to 52 per cent from 68 per cent last quarter, while those concerned about a social shock fell to 46 per cent from 53 per cent. Expectations of a geopolitical, environmental or technological disturbance were little changed, at 56 per cent, 36 per cent and 25 per cent respectively.
Confidence in global governance improved, with the number of respondents lacking faith in this area falling to 51 per cent from 61 per cent. Respondents from the Middle East and North Africa expressed more confidence in global institutions than their counterparts in Europe.
The Global Confidence Index – a joint initiative of the World Economic Forum’s Risk Response Network and Global Agenda Councils – is the only research initiative of its kind targeting such a large group of international experts who focus on monitoring key trends, identifying global risks and mapping their interlinkages. The first quarterly report was issued in September 2011 and current results are the sixth successive instalment.