Davos: Leading economists around the world have warned that the global economy would likely suffer a recession in 2023. The Chief Economist Outlook report released by the World Economic Forum in Davos highlighted this. Saadia Zahidi, Managing Director of the World Economic Forum, spelt out the finding from a report that as the global economy slows down, two third of the global economists are hinting at a likely recession to hit in 2023.
Post the coronavirus pandemic, many countries faced a recession in 2020. In 2021, there were signs of slow recovery. However, the Russia- Ukraine conflict has foiled all expectations of economies to recover completely. The war triggered a spike in energy prices and a major global supply chain disruption. Inflation in most countries is unsustainable, causing a cost-of-living crisis which led central banks worldwide to increase interest rates. It has, in turn, affected the economy, and business, causing a dip in demand.
In such scenarios, the growth rate of most countries is on a decline. A few days ago, China reported its GDP data for 2022, the lowest growth rate since 1976. The GDP growth rate of the US, UK and other European countries is also on a decline as confirmed in the World Economic Forum report. The Chief Economic Outlook report covered more than 20 leading economies. Two third of the economists have pointed out a recession, while the rest are still optimistic and reject the possibility of it. Some have warned of a major global recession and Europe facing the maximum brunt due to inflation.
Saadia Zahidi explained that the factors like rising inflation, declining growth rate, increasing debt burden, and reducing global investment are the main cause of concern. She said the investments are essential for developing and improving the lives of the needy. A few days back, International Monetary Fund (IMF) head Kristalina Georgieva warned that one-third of the world economy would be hit by economic recession this year. The head of the monetary fund also warned that this year would be tougher for the global economy than last year.
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