73 per cent of economists believe that global recession is either somewhat likely or extremely likely
The chief economists at World Economic Forum (WEF) say that the global recession is possible in 2023 considering the “once-in-a-generation inflation” in the US and Europe which could choke off global growth. According to the WEF Chief Economists Outlook report, 73 per cent of economists believe that global recession is either somewhat likely or extremely likely.
The Chief Economists Outlook survey found that 9 out of 10 respondents expect Europe’s growth to be weak. 67 per cent of respondents expect China’s growth to be weak or very weak, while they feel that the US could see moderate growth. During a panel discussion on the report, Saadia Zahidi, Managing Director, World Economic Forum said, “When we last gathered for the World Economic Forum’s Chief Economists Outlook in May, we spoke of the perfect storm brewing. Unfortunately, what seemed to be dark clouds overhead back then, is now turning into a full-blown economic storm.”
Rima Bhatia of Gulf International Bank in the panel voiced her agreement to this finding too. But she also added that it may be avoidable. “This is a supply-side issue. If China emerges from its prolonged lockdown and central banks continue to take brave action, inflationary pressures may be alleviated, and the effects of recession may be minimized”, she said.
The survey surmised that wages are expected to keep falling across the world in 2022 and 2023, as cost of living is expected to rise and threaten social unrest. As many as 60 per cent of chief economists agreed that poverty is expected to rise in high income countries, while 90 per cent agreed that poverty will be a concern in low-income countries.
It also found that the food security is at risk in large swathes of the world over the next three years as the food security concerns continue to trigger export restrictions. Many chief economists were especially concerned about the food insecurity in the South Asia and Central Asia. The panel discussing the report believes that the ‘wait and see’ approach will not help in the current fast-moving new economic reality that demands awareness and flexibility. In conclusion, the panel said that risk diversification, cost efficiencies, and sustainability will be crucial to moving forward.