Two-thirds of the participants in a survey taken late last year for the 53rd World Economic Forum’s Chief Economists Outlook briefing said a global recession was likely in 2023.
The 18% who considered a recession "extremely likely" were more than twice as many as the previous survey in September, according to the Chief Economists Outlook.
“Although there are some grounds for optimism, such as easing inflationary pressures, many aspects of the outlook remain gloomy,” the Chief Economists Outlook briefing said in the executive summary.
The briefing given at the World Economists Forum held Jan. 16 -20 in Davos, Switzerland, pointed out that there are diverging viewpoints regarding the global recession. However, 100% of chief economists now expect either weak or very weak growth throughout 2023 in the United States.
A contributor to weakening global economies has been high inflation rates. “Increasing interest rates is positive only if it doesn’t kill growth in the long term, I think short term that is not the issue at the moment,” Kjerstin Braathen, chief executive officer of DNB ASA, said, according to a tweet by the World Economic Forum.
The Chief Economists' briefing expects inflation to differ significantly from region to region; however, it is not anticipating any region to see very high inflation rates. From the survey conducted, respondents’ answers regarding high inflation rates varied from 57% for Europe to just 5% for China.
The briefing stated nine out of 10 respondents said they expect “both weak demand and high borrowing costs” and 60% of respondents expect high input costs, resulting in slowing business growth and activity. According to the briefing, 78% of respondents expect workers to be laid off.
Although a sizable percentage of respondents’ expectations for the coming year either erred on the side of caution or were pessimistic, there was a section in the survey asking to list sources of optimism given the current economic climate, the briefing reported. There were three answers repeatedly given: “the strength of household balance sheets, the peaking of inflation and the resilience of labor markets.”
Three contributors were listed for the report: Aengus Collins, Head, Economic Growth, Revival and Transformation, Centre for the New Economy and Society Kateryna Karunska, Insight Specialist, Economic Growth, Revival and Transformation, Centre for the New Economy and Society Saadia Zahidi, Managing Director, World Economic Forum and Head, Centre for the New Economy and Society.
