India driving South Asia as world's brightest growth spot: WEF survey

New Delhi: Despite a modest improvement in recent months, a majority of chief economists expect global economic conditions to weaken this year but see India anchoring South Asia as the brightest growth spot despite mounting trade headwinds, a new survey showed on Friday.

In its latest Chief Economists Outlook report, released ahead of the Davos annual meeting next week, the World Economic Forum said the global economic outlook has improved modestly but remains uncertain, with asset valuations, mounting debt, geo-economic realignment, and rapid deployment of artificial intelligence creating both opportunities and risks.

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Nearly 53 per cent of chief economists surveyed expect global economic conditions to weaken in the year ahead, down from 72 per cent in September 2025, it said.

The report, drawing from consultations and surveys with chief economists from the public and private sectors worldwide, said South Asia has returned to the top of the regional growth outlook.

Two-thirds of the chief economists surveyed expect strong (60 per cent) or very strong (6 per cent) growth, a substantial improvement compared to 31 per cent in the September edition of the report.

"South Asia remains the brightest growth spot among emerging regions, with India anchoring the outlook despite mounting trade headwinds," it said.

Despite US tariffs on Indian exports, the Reserve Bank of India's recent assessment of a 'goldilocks' economy reflected a surge of 8.2 per cent year-on-year real GDP growth in the September quarter alongside near-zero inflation.

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The WEF said India is continuing on its reform pathway by reducing employment restrictions, and AI adoption is surging alongside investments from US technology firms.

"Over one-third of respondents (36 per cent) anticipate a significant positive impact of AI investments on growth over the next two years, it added.

The WEF noted that inflation expectations in South Asia have fallen, while over two-thirds of respondents expect monetary policy to remain unchanged, and 85 per cent do not anticipate major changes to fiscal policy in the year ahead.

Globally, the survey showed three defining trends for 2026: Surging AI investment and its implications for the global economy; debt approaching critical thresholds with unprecedented shifts in fiscal and monetary policies; and trade realignments, WEF Managing Director Saadia Zahidi said.

"Governments and companies will have to navigate an uncertain near-term environment with agility while continuing to build resilience and invest in the long-term fundamentals of growth," she added.

The survey also forecast bleaker prospects for cryptocurrencies, with 62 per cent anticipating further declines following market turbulence.

Nearly 54 per cent of chief economists believed gold had peaked after recent rallies.

When it comes to the potential expected returns from AI, there was wide variation across regions and sectors.

Roughly four in five chief economists expected productivity gains within two years in the US and China.

Chief economists expected the information technology sector to adopt AI fastest, with nearly three-quarters anticipating imminent productivity gains.

Financial services, supply chain, healthcare, engineering and retail will follow as 'fast-movers', the survey showed.

The employment picture regarding AI was seen in the survey as evolving over time: two-thirds expected modest job losses over the next two years, but views diverged sharply over the longer term.

Nearly 57 per cent anticipated net losses over 10 years, while 32 per cent foresaw gains as new occupations emerge.

On growth expectation among the chief economists surveyed, South Asia led with 66 per cent anticipating strong or very strong performance, driven by robust growth in India.

Some 45 per cent expected strong growth and 55 per cent moderate growth in East Asia and the Pacific, while 36 per cent expected strong growth and 64 per cent moderate growth in the MENA region.

The US outlook improved notably, with 69 per cent expecting moderate growth, up from 49 per cent in September 2025, but only 11 per cent expecting strong growth.

China faces mixed prospects, with 47 per cent expecting moderate growth, 24 per cent strong growth and 29 per cent expecting weak growth.

Europe confronts the weakest outlook, with 53 per cent expecting weak growth, 44 per cent moderate growth, and only 3 per cent anticipating strong growth. PTI