Global financial markets are bracing for an extended period of turbulent trading, with a vast majority of the world’s leading financial minds warning of a severe volatility shock across equity, private credit, and public debt markets.
The grim projection is the highlight of the May 2026 edition of the World Economic Forum’s Chief Economists’ Outlook report, published on Thursday. The report reveals a sharp deterioration in international macroeconomic indices over the last few weeks, effectively erasing the cautious optimism that characterised the start of the year.
According to the data, 68 per cent of surveyed chief economists anticipate significant volatility spikes across global stock markets. This institutional anxiety stems directly from geopolitical frictions in the Middle East, particularly the ongoing closure of the critical Strait of Hormuz maritime trade corridor, which has triggered fears of a major supply chain disruption and energy price shock.
The report notes that market pressure is not confined to public equities alone, as 79 per cent of respondents also forecast rising distress and volatility within private debt markets, while 74 per cent expect public debt instruments to experience significant yield fluctuations.
Underscoring the rapid deterioration of the global landscape at the report’s presentation, the Managing Director of the World Economic Forum, Saadia Zahidi, warned that the compounding headwinds would exact a steep humanitarian and economic toll.
“Only months ago, the Chief Economists community was cautiously optimistic,” Zahidi stated. “The conflict in the Middle East changed that, and the economic scarring from the situation thus far is already expected to last into the months ahead. The longer the disruption lasts, the heavier the long-term cost for those who can least afford it,” she added.
Zahidi further emphasised that while the global economy is not currently tipped to plunge into an outright recession within the next 12 months, the margin for safety has shrunk to negligible levels.
Concurring with the global assessment, the Director of Development Economics at the World Bank, Dr Ayhan Kose, pointed out that the closure of the Strait of Hormuz is already proving more disruptive to macroeconomic stability than previous trade disputes.
“Chief economists already rank the current closure duration of the Strait of Hormuz as significantly more disruptive than last year’s tariff turmoil,” Kose remarked. “If the closure persists into the second half of the year, its impact could approach the severity of the COVID-19 crisis, compounding effects across global supply chains, energy, and food costs.”
The survey also indicates a sharp regional divergence in economic resilience. While the United States and India are expected to absorb the shock due to robust domestic demand, sub-Saharan Africa has been hit with the highest inflation expectations of any region surveyed, fuelled by an overwhelming 94 per cent global consensus that consumer prices will surge.
Compounding macroeconomic strain, the WEF report revealed that corporations cannot rely on rapid technology-driven turnarounds to bypass the downturn. Although 92 per cent of economists expect artificial intelligence adoption to accelerate, productivity gains are now projected to take much longer to materialise in heavy sectors such as engineering, healthcare, and utilities than originally anticipated at the start of 2026.
