Chief economists expect slower growth, higher inflation, and greater market volatility over the next year as disruption in the Strait of Hormuz adds a new layer of uncertainty to the global economy.
The global growth outlook has deteriorated sharply in recent weeks as conflict in the Middle East and disruption to shipping through the Strait of Hormuz force economists to reassess expectations for the world economy. According to the latest Chief Economists’ Outlook from the World Economic Forum, nearly nine in ten chief economists now expect global growth to weaken over the next 12 months.
The change marks a significant reversal from the cautious optimism that prevailed at the beginning of 2026. Rising energy prices, supply chain disruptions, and renewed inflationary pressure have replaced hopes of a more stable economic recovery.
The Strait of Hormuz sits at the centre of these concerns. The waterway handles approximately 20% of global oil shipments and remains one of the world’s most important trade routes. Economists surveyed by the Forum now consider the current disruption more damaging than last year’s tariff disputes. If the situation persists through the second half of 2026, some believe the economic impact could approach the scale of the disruptions seen during the COVID-19 pandemic.
Inflation has become the most immediate concern. An overwhelming 94% of surveyed chief economists expect global inflation to rise over the coming year. Higher energy costs are expected to filter through supply chains, increasing the cost of transportation, manufacturing, food production, and consumer goods.
For the Middle East and North Africa, the outlook has shifted dramatically. Earlier this year, the region ranked among the most promising growth markets. Today, 88% of surveyed economists expect weak or very weak economic growth across the region.
The reversal highlights how quickly geopolitical events can alter economic expectations. While energy-exporting countries may benefit from higher oil prices, broader uncertainty risks delaying investment decisions, increasing operating costs, and slowing private sector activity.
Europe faces a different challenge. Economists increasingly warn of stagflation, where economic growth weakens while inflation remains elevated. Sub-Saharan Africa is expected to experience the strongest inflation pressures among all regions covered by the survey.
India and the United States appear comparatively resilient. Strong domestic demand, ongoing investment, and large internal markets are expected to provide a degree of protection from external shocks, although neither economy is immune to higher energy costs and global market volatility.
Despite the worsening global growth outlook, most chief economists do not expect a recession. Only 13% believe the world economy is likely to enter a recession over the next 12 months. The consensus view is that growth will slow rather than contract.
Financial markets are expected to experience a more turbulent period. Nearly eight in ten economists anticipate higher volatility in private debt markets, while most also expect greater fluctuations in public debt and equity markets as investors respond to changing economic conditions.
Artificial intelligence remains one of the few areas generating widespread optimism. Ninety-two percent of surveyed economists expect AI adoption to accelerate during the coming year, supporting investment and long-term productivity growth.
Even here, expectations have become more measured. Economists now believe productivity gains from AI will take longer to materialize across most industries than they expected only a few months ago. Technology and education remain the sectors where benefits are expected to emerge most quickly. Construction, engineering, utilities, healthcare, and care services are now expected to see slower productivity improvements.
The message from the survey is straightforward. The global economy remains on a growth path, but it has become considerably more vulnerable. Geopolitical tensions are driving short-term risks, while artificial intelligence continues to offer longer-term opportunities. Which force proves stronger may determine the global growth outlook for the remainder of 2026.
