Two-thirds of private and public sector chief economists surveyed by the World Economic Forum (WEF) expect a global recession in 2023, according to a survey released today by the Forum as business leaders and heads of government gather in Davos, Switzerland for its annual meeting.
18% estimates that a global recession is «extremely likely» - more than double the rate of the previous survey conducted in September 2022. Only a third of respondents said they think it is unlikely this year.
«Today's high inflation, low growth, high debt and highly fragmented environment reduce the incentives for the investment needed to return to growth and raise living standards for the world's most vulnerable,» said WEF Director-General Saadia Zahidi in a statement accompanying the survey's findings.
The agency's survey was based on 22 responses from a group of senior economists from institutions such as the International Monetary Fund, investment banks, multinationals and reinsurance groups.
Last week the World Bank revised its 2023 growth forecast downwards to near-recession levels for many countries as the impact of central bank interest rate hikes intensifies and Russia's war in Ukraine continues.
Around the world there are variations in the definitions of recession, but they generally include the prospect of shrinking economies, possibly with high inflation in a «stagflation» scenario.
On inflation, the WEF survey showed wide regional variations: the proportion expecting high inflation in 2023 ranged from just 5% for China to 57% for Europe, where the impact of the rise in energy prices last year has spread to the wider economy.
The majority of economists expect further tightening of monetary policy in Europe and the US (59% and 55% respectively).
Other important findings of the research are:
Nine out of ten respondents expect weak demand and high borrowing costs to put pressure on businesses, with over 60% also indicating higher input costs.
these challenges are expected to drive multinational companies to cut costs, from reducing operating expenses to laying off workers.
but supply chain problems are not expected to be a major drag on business activity in 2023.
the cost of living crisis may also be nearing its peak, with the majority of respondents (68%) expecting it to become less severe by the end of 2023.
