“The current environment of high inflation, low growth, high debt and high fragmentation reduces incentives for the investments needed to return to growth and raise living standards for the world’s most vulnerable,” said WEF Managing Director Saadia Zahidi. , in a statement accompanying the survey results.
The organization’s survey was based on 22 responses from a group of high-level economists from international organizations such as the International Monetary Fund, investment banks, multinationals and reinsurance groups.
The survey comes after the World Bank last week cut its 2023 growth forecasts to near-recession levels for many countries, as the impact of central bank rate hikes intensifies, the war on Russia in Ukraine and the world’s main economic engines are reeling.
Definitions of what constitutes a recession differ around the world, but generally include the prospect of contracting economies, possibly with high inflation in a “stagflation” scenario.
Expectations regarding inflation
Regarding inflation, the WEF survey shows large regional variations: the proportion expecting high inflation in 2023 ranges from 5% in China to 57% in Europe, where the impact of rising energy prices last year has spilled over into the broader economy.
Most economists forecast further monetary policy tightening in Europe and the United States (59% and 55%, respectively), with policymakers caught between the risks of tightening too much or too little.
Other important conclusions
– Nine out of ten respondents expect both weak demand and high borrowing costs to weigh on businesses and more than 60% also point to higher input costs.
– These challenges are expected to drive multinational companies to cut costs, from reducing operating expenses to laying off workers.
– However, supply chain disruptions are not expected to be a significant drag on business activity in 2023.
– The cost of living crisis could also be reaching its peak, with most (68%) expecting it to have abated by the end of 2023.
Source: Ambito
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