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
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×