Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Global recession likely in 2023 as inflation peaks: WEF chief economists

Global recession likely in 2023 as inflation peaks: WEF chief economists

Two-thirds of chief economists at the World Economic Forum have predicted a global recession in 2023 with continued geopolitical tensions, and further monetary tightening in the US and Europe.
The conclusion came in key findings of the Chief Economists Outlook, launched on Monday on the first day of the forum’s Annual Meeting in Davos, Switzerland.

Of the majority predicting a recession, 18 percent said it was extremely likely, against a third of respondents who thought the opposite.

The outlook in September 2022 was slightly less gloomy, when 64 percent of respondents stated that a global recession was “somewhat likely” in 2023.

Saadia Zahidi, managing director at the WEF, said: “With two-thirds of chief economists expecting a worldwide recession in 2023, the global economy is in a precarious position.

“The current high inflation, low growth, high debt, and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable.

“Leaders must look beyond today’s crises to invest in food and energy innovation, education and skills development, and in job-creating, high-potential markets of tomorrow. There is no time to lose,” she added.

When surveyed about China, half of the respondents said they expected strong growth while the remainder predicted the opposite. Recent efforts to loosen the country’s zero-COVID policy were aimed at yielding a boost to growth, but it remained to be seen how disruptive the policy shift would be, namely in relation to health impacts.

Inflation was expected to vary significantly across regions, with 5 percent of the chief economists predicting high inflation in China, while 57 percent believed the surge would happen in Europe.

After a year of sharp and coordinated central bank tightening, the chief economists said the monetary policy stance would likely remain constant in most of the world this year.

A majority, however, expected further monetary tightening in Europe and the US – 59 percent and 55 percent, respectively. They highlighted that 2023 was likely to involve a difficult balancing act for policymakers between tightening too much or too little.

Business activity was also forecast to receive numerous blows in 2023. Nine out of 10 respondents expected both weak demand and high borrowing costs to weigh on firms, with more than 60 percent also pointing to higher input costs.

The chief economists expected the challenges to lead multinational businesses to cut costs, with 86 percent predicting that firms would reduce operational expenses, 78 percent expecting layoffs, and 77 percent seeing optimized supply chains this year.

The chief economists expected the global landscape to remain challenging for businesses – 100 percent of respondents said global geopolitical trends would continue redrawing the map of world economic activity along new geopolitical fissures and fault lines.

Such a wider economic shift would likely reverberate through trade, investment, labor, and technology flows, creating innumerable challenges as well as opportunities for business.

One positive signal was that supply chain disruptions were not expected to cause a significant drag on business activity in 2023.

While the forum’s Global Risks Report 2023 recently found the cost-of-living crisis to be among the world’s most urgent risks, the chief economists saw the crisis potentially nearing its peak, with 68 percent expecting it to have become less severe by the end of 2023.

A similar trend was evident in relation to the energy crisis, with 64 percent of respondents expecting some improvement by the year's end.

In addition, survey respondents highlighted several potential sources of optimism at the start of 2023, including the strength of household finances, growing signs of easing inflationary pressures, and continued labor-market resilience.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
U.S. and Hungarian Officials Talk About Economic Collaboration and Sanctions Strategy
Technology Giants Activate Lobbying Campaigns Against Strict EU Regulations
Pope Francis Admitted to Hospital in Rome Amid Increasing Speculation on Succession
Zelensky Calls on World Leaders to Back Peace as Tensions Rise with Trump
UK Leader Keir Starmer Calls for US Security Guarantee in Ukraine Peace Deal
NATO Chief Urges Higher Defense Expenditure in Europe
The negotiation teams of Trump and Putin meet directly, establishing the groundwork for a significant advancement.
Rubio Touches Down in Riyadh Before Key U.S.-Russia Discussions
Students in Serbian universities Unite to Hold Coordinated Protests for Accountability.
US State Department Removes Taiwan Independence Statement from Website
Abolishing opposition won't protect Germany from Nazism—this is precisely what led Germany to become Nazi!
Transatlantic Gold Rush: Traders Shift Bullion in Response to Tariff Anxieties and Market Instability
Bill Ackman Backs Uber as the Company Shifts Towards Profitability
AI Titans Challenge Nvidia's Supremacy in Light of New Chip Innovations
US and Russian Officials to Meet in Saudi Arabia Over Ending Ukraine Conflict. Ukraine and European leaders – who profit from this war – excluded from the negotiations.
Macron Calls for Urgent Summit as Ukraine Conflict Business Model is Threatened
Trump’s Defense Secretary: Ukraine Won’t Join NATO or Regain Lost Territories
Zelensky Urges Europe to Bolster Its Military in Light of Uncertain US Backing
Chinese Zoo Confesses to Dyeing Donkeys to Look Like Zebras
Elon Musk is Sherlock Holmes - Movie Trailer Parody featuring Donald Trump's Detective
Trump's Greenland Suggestion Sparks Sovereignty Discussions Amid Historical Grievances
OpenAI Board Dismisses Elon Musk's Offer to Acquire the Company.
USAID Uncovered: American Taxpayer Funds Leveraged to Erode Democracy in Europe Until Trump Put a Stop to It.
JD Vance and Scholz Did Not Come Together at the Munich Security Conference.
EU Official Participates in Discussions in Washington Amid Trade Strains
Qatar Contemplates Reducing French Investments Due to PSG Chief Investigation
Germany's Green Agenda Encounters Ambiguity Before Elections
Trump Did Not Notify Germany's Scholz About His Ukraine Peace Proposal.
Munich Car Attack Escalates Migration Discourse Before German Elections
NATO Allies Split on Trump's Proposal for 5% Defense Spending Increase
European Parliament Advocates for Encrypted Messaging to Ensure Secure Communications
Trump's Defense Spending Goal Creates Division Among NATO Partners
French Prime Minister Bayrou Navigates a Challenging Path Amid Budget Preservation and Immigration Discourse
Steering Through the Updated Hierarchy at the European Commission
Parliamentarian Calls for Preservation of AI Liability Directive
Mark Rutte Calls on NATO Allies to Increase Defence Expenditures
Dresden Marks the 80th Anniversary of the World War II Bombing.
Global Community Pledges to Aid Syria's Political Transition
EU Allocates €200 Billion for AI Investments, Introduces €20 Billion Fund for Gigafactories
EU Recognizes Its Inability to Close the USAID Funding Shortfall Due to Stalled US Aid
Commission President von der Leyen Missing from Notre Dame Reopening Due to Last-Minute Cancellation
EU Officializes Disinformation Code for Online Platforms, Omitting X
EU Fails to Fully Implement Key Cybersecurity Directives
EU Under Fire for Simplification Discussions Regarding Corporate Sustainability Reporting
Shein Encountering Further Information Request from the EU During Ongoing Investigation
European Commission Initiates Investigation into Shein as It Aims at Chinese E-Commerce Regulations
German Officials Respond to U.S. Proposal for Peace Talks with Russia
Senate Approves Robert F. Kennedy Jr. as Secretary of Health and Human Services.
Trump and Putin Engage in Discussions on Ukraine Peace Negotiations Amid Worldwide Responses
Honda and Nissan End Merger Talks
×