According to a new survey by the World Economic Forum (WEF), a global recession is likely to occur in 2023. The WEF’s Chief Economists Outlook survey indicated that pressures on food, energy and inflation may be peaking, but some economies in the South Asia region, including Bangladesh and India, may benefit from global trends such as a diversification of manufacturing supply chains away from China.
The survey revealed that globally businesses are expected to cut costs significantly in response to economic headwinds, but chief economists are optimistic about inflation and strong balance sheets. Almost two-thirds of chief economists surveyed believe a global recession is likely in 2023, with 18% considering it extremely likely. However, a third of respondents consider a global recession to be unlikely this year.
All of the chief economists surveyed expect weak or very weak growth in 2023 in Europe, while 91% expect weak or very weak growth in the US. Expectations of growth in China are polarised, with respondents almost evenly split between those who expect weak or strong growth. On inflation, the chief economists see significant variation across regions, with the proportion expecting high inflation in 2023 ranging from just 5% for China to 57% for Europe.
The WEF’s Managing Director, Saadia Zahidi, emphasized that leaders must invest in food and energy innovation, education, and skills development to create job-creating, high-potential markets of tomorrow, stating that “there is no time to lose.” The chief economists expect the global landscape to remain challenging for businesses, with 100% of respondents expecting global geopolitical trends to continue redrawing the map of global economic activity along new geopolitical fissures and fault lines. This wider economic shift will likely reverberate through trade, investment, labor, and technology flows, creating myriad challenges and opportunities for businesses.
In addition, the survey found that the chief economists expect supply chain disruptions to not cause a significant drag on business activity in 2023. However, they also expect geopolitical tensions to continue shaping the global economy, and anticipate further monetary tightening in the United States and Europe.
This report highlights the need for businesses to be prepared for a potential recession in 2023 and to plan for the challenges and opportunities that may arise from geopolitical tensions and supply chain disruptions. Businesses should also be aware of the potential for diversification of manufacturing supply chains away from China, and how it may impact their operations and supply chains.
It is also important for governments and leaders to take action to invest in food and energy innovation, education, and skills development, to support job-creating, high-potential markets of tomorrow and mitigate the impact of a potential global recession.
In summary, The WEF report emphasizes that the global economy is in a precarious position and leaders must take action to invest in the future and mitigate the impact of the potential global recession, in order to raise living standards for the world’s most vulnerable.
