Global recession likely, say 63% of chief economists in WEF survey

Global recession likely, say 63% of chief economists in WEF survey

Many chief economists offered grim predictions about whether the world economy would slide into recession in 2023, according to a World Economic Forum (WEF) survey released Monday.

In the World Economic Forum’s Chief Economists’ Outlook survey, 63% of chief economists surveyed indicated they expected the global economy to experience a recession this year. Of that number, 45% said one was “somewhat likely” and 18% said “extremely likely.”

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The proportion of chief economists who consider the probability of a global recession “extremely likely” has more than doubled compared to those who thought the same in September, according to the WEF.

Thirty-two percent said one was “extremely” or “somewhat” unlikely.

Prospects for economic growth varied by region, according to the survey.

The top economists surveyed were the most pessimistic about Europe, with 68% predicting “very weak” growth and 32% saying “weak”. For the US, 82% forecast “weak” growth, while 9% said it was “very weak” and “moderate,” respectively, according to the survey.

The two regions of South Asia and the Middle East and North Africa (MENA) saw the most positive expectations for economic growth. Some 70% of chief economists expected moderate or strong growth in the MENA region, while 85% said the same about South Asia.

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The Chief Economists’ Outlook survey also asked chief economists to weigh in on what inflation would look like in various regions.

More than three-quarters said they expected moderate inflation in the US in 2023, while 24% said it would be high. In Europe, 43% predicted moderate inflation and 57% predicted high inflation.

Leading economists also thought inflation would be moderate, 55%, or high, 45%, in Latin America and the Caribbean. Many forecast moderate inflation for other regions as well.

Meanwhile, 48% of leading economists projected China to have “very low” inflation in 2023. The same proportion said they expect inflation to moderate there.

While leading economists “expect the monetary policy stance to remain constant in most of the world in 2023,” 59% projected that Europe would experience tightening, the WEF said. A majority, 55%, also anticipated that for the US.

The US Federal Reserve raised interest rates multiple times in 2022, including four consecutive 75 basis point hikes and most recently a 50 basis point hike, as previously reported by FOX Business.

Federal Reserve

The United States Federal Reserve in Washington, DC (Liu Jie/Xinhua via Getty Images/File/Getty Images)

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For this year, 68% of chief economists said they “agree” or “strongly agree” that the cost-of-living crisis “will be less severe at the end of the year than at the beginning,” according to the survey. They also expressed optimism about this year’s energy crisis, with 64% indicating they believe it is likely to be less severe.

The outlook was more divided for labor markets. About 41% of the top economists surveyed projected they would stay tight, while the same percentage suggested they would not, the survey found.

The WEF published the results of the survey on the same day that its annual meeting of heads of state and business leaders began in Davos, Switzerland.

The survey was conducted between November and December of last year and included responses from 22 members of its community of chief economists.

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