02 | THE OUTLOOK – ECONOMIC OUTLOOK
ECONOMIC OUTLOOK
Uncertainty clouds the economic outlook for 2024 and the next few years – probably more so than at any other time in recent memory. In this challenging global environment, there is an array of difficulties to overcome, however there is also hope that adversity can inspire positive change and new tech- nology can deliver lasting solutions. Most of the OPEC Fund’s partner countries are caught in the middle of rapidly changing global economic and financial conditions – ones that they have little influence over and cannot realistically change in their favor.
What happens in the future depends on the interaction and combination of how the driving forces continue to operate, when and how shocks develop, and which risks materialize. The fragilities connected to these factors can amplify the shocks. Four of which are of particular concern: • Environmental: As the global economy grows, its adverse impact on the environment is likely to increase – as has been detailed in UN Climate Change Conferences over the years 1 .
• Financial: Public and private debt is at very high levels 2 , and any widespread default could led to economic depression.
Given this backdrop, the macroeconomic outlook for 2024 and beyond will likely be influenced by five long term driving forces:
• Domestic politics: The rules-based order of global co- operation is at heightened risk of being undermined 3 with questions over economic integration and the increasing primacy of narrow self-interest. • International politics: There are no signs of a broad- based retreat from globalization 4 but fault lines are emerging. This raises serious questions for the global economy in a more fragmented world, including the ongoing and potential implications of armed conflict. A failure to manage these fragilities would make sig- nificant shocks more likely and more difficult to deal with. One can make a strong argument that the world is more unpredictable and complex than at any point in the past 30 years. Therefore, the OPEC Fund is striving
• Demography • Climate change • Technology • Global spread of knowledge • Economic growth
Together, these forces will both shape the global econo- my and the outlook for the OPEC Fund partner countries this year as well as over the medium term. These forces are all subject to shocks (a realized risk), risks (their like- lihood and severity are unknown) and fragilities (which increase the likelihood and/or the severity of a shock), which underscores the significant uncertainty over what the coming years hold.
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