The survey released in Davos, dark clouds for the global economy in 2023
Two-thirds of leading economists of the public and private sector expect a global recession in 2023according to a survey published today on the occasion of World Economic Forum (WEF) of Davos which indicates global conflicts and monetary tightening by central banks as elements of the crisis even if inflation seems to have finally reached its peak as also hypothesized by the International Monetary Fund which estimates global price growth at 6.5% this year from 8.8% in 2022.
Surveyed economists expect further monetary tightening in the US and Europe this year and believe geopolitical tensions continue to shape the global economy. About 18% of respondents, more than double the previous survey in September 2022, considered a global recession “extremely likely” while only a third thought it unlikely. In the ‘Chief Economists Outlook’ – which collected the opinions of leading economists from the IMF to large investment banks – a strong consensus emerged that the growth prospects in 2023 are bleak, especially in Europe and the United States. All major economists surveyed expect weak or very weak growth in 2023 in Europe, while 91% expect weak or very weak growth in the United States. This marks a deterioration from the last statement, when the corresponding figures were 86% for Europe and 64% for the US.
“The current environment of high inflation, low growth, high debt and high fragmentation reduces the investment incentives needed to return to growth and improve living standards for the world’s most vulnerable,” said the WEF chief executive Saadia Zahidi. “Leaders must look beyond today’s crises to invest in food and energy innovation, education and skills development, and tomorrow’s high-potential markets that create jobs. There is no time to waste,” he said. added.
Nine out of ten respondents expect both weak demand and high borrowing costs to weigh on businesses, with over 60% also indicating higher input costs. The estimate is that these challenges will lead multinational companies to cut costs, with many chief economists expecting companies to cut operating expenses.