World Economic Outlook (WEO)

Why In the News?

Recently, the International Monetary Fund (IMF) released its January 2026 update of the World Economic Outlook, titled “Global Economy: Steady amid Divergent Forces,” in which it upgraded the global growth forecast for 2026 to 3.3%.
This upward revision is primarily attributed to a massive surge in Artificial Intelligence (AI) investments, resilient supply chains, and a faster-than-expected easing of global inflation.
Key Facts About World Economic Outlook (WEO)
- Released By: The report is a flagship publication of the International Monetary Fund (IMF).
- Frequency: It is published twice a year (usually in April and October), with partial updates released in January and July.
- Purpose: The WEO provides a comprehensive analysis of the global economy, covering near-term and medium-term growth projections, inflation trends, and financial stability.
- Data Source: The projections are based on consultations between IMF staff and member countries (Article IV consultations).
Major Highlights (January 2026 Update)
- Global Growth Projections: The global economy is expected to grow by 3.3% in 2026 and 3.2% in 2027, showing resilience despite geoeconomic fragmentation.
- Inflation Trends: Global headline inflation is projected to decline from 4.1% in 2025 to 3.8% in 2026, although the pace of disinflation varies across regions.
- AI as a Growth Catalyst: The IMF identifies AI-related investments in data centers and semiconductors as a significant driver that could add up to 0.3 percentage points to medium-term global productivity.
- Risk Factors: Key downside risks identified include geoeconomic confrontation, trade protectionism (tariffs), potential asset bubbles in the tech sector, and geopolitical disruptions in energy-sensitive regions.
India-Specific Observations
- Fastest Growing Economy: India is projected to remain the world’s fastest-growing major economy, with a growth forecast of 6.4% for both 2026 and 2027.
- Drivers of Growth: Strong domestic demand, robust private consumption, and significant government investment in infrastructure and digitalization are the primary pillars of India’s economic performance.
- Consumer Market: India is on track to become the world’s third-largest consumer market by 2026, supported by a rapidly expanding middle class.
Other Key Flagship Reports of WEF

The World Economic Forum is a Swiss non-profit foundation that acts as a platform for public-private cooperation. It publishes several high-impact reports that are essential for the UPSC Prelims.

I. Global Risks Report

Purpose: It identifies and analyzes the most pressing risks the world faces over two-year and ten-year horizons.
Key Categories: Economic, Environmental, Geopolitical, Societal, and Technological risks.
Current Trend: The 2026 report warns of an “age of competition,” where trade protectionism and AI-driven misinformation are top concerns.

II. Global Gender Gap Report

Dimension of Assessment:
- Economic Participation and Opportunity (India’s weakest area).
- Educational Attainment (India’s strongest area).
- Health and Survival.
- Political Empowerment.
India’s Status (2025): India is ranked 131st out of 148 countries, showing a slight slip in rank despite a marginal improvement in its parity score.

III. Energy Transition Index (ETI)

Report Name: Fostering Effective Energy Transition.
Pillars: System Performance (Equity, Security, Sustainability) and Transition Readiness (Regulation, Infrastructure, Innovation).
India’s Status (2025): India is ranked 71st, falling from 63rd in 2024, though it received praise for improvements in energy efficiency and investment capacity.

IV. Future of Jobs Report

Focus: It explores how technology, particularly Generative AI, is reshaping the labor market and identifies the skills most in demand (e.g., analytical thinking, creative thinking, and AI literacy).

V. Other Notable Publications

Global Competitiveness Report: Assesses the drivers of productivity.
Travel & Tourism Development Index: Ranks on the attractiveness and sustainable development of the travel sector.
Global Cybersecurity Outlook: Examines the growing “cyber inequity” between organizations.

Q. Consider the following pairs of Reports and their Publishing Bodies:
1.	Global Risks Report — World Economic Forum (WEF)
2.	Energy Transition Index — International Energy Agency (IEA)
3.	Future of Jobs Report — World Economic Forum (WEF)
4.	Global Competitiveness Report — World Bank

Which of the pairs given above are correctly matched? 
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 4 only 
(d) 1, 2 and 3 only

Correct Answer: (b)
Solution: 
STATEMENT 1 CORRECT: The Global Risks Report is the flagship publication of the WEF, based on the Global Risks Perception Survey.
STATEMENT 2 INCORRECT: The Energy Transition Index (ETI) is published by the World Economic Forum (WEF), not the IEA.
STATEMENT 3 CORRECT: The Future of Jobs Report is an annual/biennial publication by the WEF focusing on labor market transformations.
STATEMENT 4 INCORRECT: The Global Competitiveness Report is a flagship publication of the World Economic Forum (WEF), while the World Bank publishes the (now discontinued) 'Doing Business' report and the 'World Development Report'