Global financial markets are preparing for a prolonged phase of heightened volatility, as most of the world’s top economists warn of a potential shock across equities, private credit, and sovereign debt markets.

The outlook is highlighted in the May 2026 edition of the World Economic Forum’s Chief Economists’ Outlook, released on Thursday. The report points to a sharp worsening in global macroeconomic indicators in recent weeks, wiping out the cautious optimism that had opened the year.

According to the data, 68 per cent of surveyed chief economists expect significant spikes in volatility across global equity markets. The heightened institutional concern is largely driven by geopolitical tensions in the Middle East, especially the continued disruption of the Strait of Hormuz maritime trade route, which has raised fears of supply chain bottlenecks and an energy price shock.

The report also highlights that market stress is not limited to equities. About 79 per cent of respondents anticipate increasing distress and volatility in private debt markets, while 74 per cent expect notable fluctuations in government bond yields across public debt markets.

The Managing Director of the World Economic Forum, Saadia Zahidi, warned that the compounding headwinds could impose a severe 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.”

Zahidi further noted that although the global economy is not expected to fall into an outright recession within the next 12 months, the buffer for stability has narrowed to almost negligible levels.

Echoing the global assessment, the Director of Development Economics at the World Bank, Ayhan Kose, noted that the closure of the Strait of Hormuz is already having a greater disruptive impact on macroeconomic stability than earlier 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 points to a pronounced regional divergence in economic resilience. The United States and India are expected to better absorb the shock, supported by strong domestic demand, while sub-Saharan Africa faces the highest inflation expectations of any region surveyed.

This is reinforced by a near-unanimous 94 per cent global consensus that consumer prices are set to rise significantly.