India May Benefit from Global Trends; Global Recession "extremely Likely" in 2023: WEF
Members of the Community of Chief Economists of the World Economic Forum have predicted a global recession in 2023, with nearly 18% of them stating that it is "extremely likely" as geopolitical tension continues to affect the world economy and further monetary tightening in the United States and Europe.
"Nearly two thirds of participants believe that a worldwide recession is likely to occur in 2023. 18% of respondents, more than twice as many as in the prior survey conducted in September 2022, believe it to be extremely likely "according to "The January 2023 Chief Economic Outlook" published by the Centre for the New Economy and Society of the World Economic Forum.
From September to November 2022, the survey was carried out.
Despite differences in view, some respondents think that a global recession this year is improbable.
Every respondent believed that patterns of economic activity will continue to alter around the world in line with new geopolitical fissures and faultlines, with 73% indicating somewhat and 27% saying extremely likely. War and international tensions continue to influence global economic developments.
The survey's objective
The study makes recommendations for additional action by policymakers and business leaders based on a summary of the evolving features of the current economic situation and the accumulating shocks to the global economy from geo-economic and geopolitical events.
According to the survey, the US and Europe are both in precarious positions regionally, with 100% of chief economists anticipating weak or very weak growth in the first region for 2023 and 91% in the latter.
Strongest areas anticipated in 2023
According to the report, South Asia and the Middle East and North Africa (MENA) would be the two most powerful areas in 2023.
In South Asia, 85% of respondents anticipate either high (15%) or moderate (70%) growth, which is a little improvement from the September survey. Global trends like the diversification of manufacturing supply chains away from China may be advantageous for some economies in the area, particularly Bangladesh and India.
No areas are expected to see "Very High" inflation
The percentage of respondents who predicted significant inflation ranged from 57% for Europe to just 5% for China, therefore no region is expected to see exceptionally high inflation. The top experts polled predict that the synchronised and sharp tightening of monetary policy that was observed last year would continue this year.
However, with 59% and 55% of respondents, respectively, anticipating greater tightening in Europe and the US.
worries over the expense of living
At the start of 2023, concerns about the expense of living are still very important in many countries. The majority of survey respondents (68%) predicted that the cost of living issue would have abated by the end of 2023, despite the fact that the survey results suggest that the issue may be approaching its peak.
Similar trends can be seen in the energy sector, where more than two-thirds of respondents are optimistic that things will start to improve by the end of the year.
source of encouragement
Chief economists were also asked to list any causes for optimism on the state of the global economy at the time of the survey. The robustness of household balance sheets, the peaking of inflation, and the tenacity of labor markets were three reasons that came up often.
Despite some encouraging signs in the final months of 2022—a decline in inflationary pressures, a modest improvement in consumer sentiment, and a stabilization of commodity prices—nearly one in five respondents—more than twice as many as in the previous survey in September 2022—now believe that a global recession in 2023 is extremely likely.
However, 32% of respondents, more than twice as many as in September, also think a worldwide recession is highly unlikely or improbable. This polarised picture is a result of consistently high uncertainty over the effectiveness and duration of tighter policy measures, as well as lowering growth prospects in most regions, but not all.