A majority of the World Economic Forum’s Community of Chief Economists expect a global recession in 2023, see geopolitical tensions continuing to shape the global economy, and anticipate further monetary tightening in the US and Europe.
The forecast, published today at the World Economic Forum Annual Meeting in Davos-Klosters, Switzerland, shows that almost two-thirds of chief economists believe a global recession is likely this year.
Of these, 18% consider it extremely likely – more than twice as many as in a survey from last September – while a third of respondents consider a global recession to be unlikely this year.
But even among the more optimistic group there is a strong consensus that the prospects for growth in 2023 are bleak, the WEF reports, especially in Europe and the US.
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.
In China, expectations of growth are polarized, with respondents almost evenly split between those who expect weak or strong growth and uncertainty heightened by the recent zero-COVID policy shift.
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.
“With two-thirds of chief economists expecting a world-wide recession in 2023, the global economy is in a precarious position. The current high inflation, low growth, high debt and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable,” said Saadia Zahidi, Managing Director at the World Economic Forum.
“Leaders must look beyond today’s crises to invest in food and energy innovation, education and skills development, and in job-creating, high-potential markets of tomorrow. There is no time to lose.”
The WEF notes that multiple headwinds are also expected to exert a drag on business activity in 2023, with nine out of 10 respondents expecting both weak demand and high borrowing costs to weight on firms, with more than 60% also pointing to higher input costs.
These challenges are expected to lead multinational businesses to cut costs, with many chief economists expecting firms to reduce operational expenses, lay off workers and optimize supply chains.
And more broadly, the chief economists expect the global landscape to remain challenging for businesses, with economic shifts to reverberate through trade, investment, labour and technology flows, creating myriad challenges and opportunities for business.
