The World Economic Forum’s Chief Economists Outlook, presented at their Annual Meeting in Davos-Klosters, Switzerland, offers insights into the anticipated economic trends for the year 2023. The findings, based on responses from the Forum’s Community of Chief Economists, provide a comprehensive analysis of the global economic landscape.
A significant portion of chief economists, nearly two-thirds, anticipate a global recession in 2023. Among them, 18% consider this outcome extremely likely, showing an increase in concern since the previous survey in September 2022. However, a third of the respondents believe a global recession is unlikely this year.The outlook for economic growth in 2023 appears subdued, particularly in Europe and the United States. All surveyed chief economists predict low growth rates for Europe, while 91% foresee similar trends for the US. This represents a decline from previous expectations (86% for Europe and 64% for the US in the last survey).
In contrast, predictions for China’s economic growth are divided, with opinions nearly split between weak and strong growth projections. China’s recent steps to relax its zero-COVID policy are expected to contribute to economic growth, though the implications of this policy shift, especially in terms of health impacts, are yet to be fully understood. Inflation expectations vary regionally, with chief economists predicting high inflation rates in 2023, ranging from 5% for China to 57% for Europe. Following significant central bank interventions in 2022, the economists expect monetary policies to remain largely unchanged in most regions, but anticipate further tightening in Europe and the US.
Saadia Zahidi, Managing Director at the World Economic Forum, emphasizes the need for global leaders to focus on investment in innovation, education, skills development, and potential markets to stimulate growth and improve living standards, especially considering the expected economic challenges. The survey also reveals multiple factors likely to impact business activities in 2023. A majority of the economists anticipate issues such as weak demand, high borrowing costs, and increased input costs. Consequently, they expect multinational businesses to undertake cost-cutting measures, including reducing operational expenses, workforce downsizing, and optimizing supply chains.
Furthermore, the chief economists unanimously agree that geopolitical trends will continue to reshape global economic activity. This shift is expected to affect trade, investment, labor, and technology flows, presenting both challenges and opportunities for businesses. On a positive note, supply chain disruptions are not anticipated to significantly hinder business activities in 2023. Regarding the cost-of-living crisis, a majority of the economists (68%) expect it to diminish by the end of the year, with a similar outlook for the energy crisis.
In conclusion, the World Economic Forum’s Chief Economists Outlook for 2023 presents a mixed picture of the global economy, with expectations of modest growth, continued inflation, and multiple challenges for businesses, alongside some areas of potential improvement in supply chains and living costs.
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