Cost of living expectation at economists’ ‘crisis’ level
While leading economists participating in the World Economic Forum (WEF) survey are divided on the prospect of a global recession this year, many expect the cost of living to remain at “crisis” levels and high inflation.
According to the Chief Economists Outlook 2023 report, prepared by WEF with the participation of public and private economists, forecasts for global economic growth and inflation vary widely by region.
45% of economists expect a global recession this year, while 45% see it as unlikely.
Due to the lifting of the Covid-19 measures in China, the most vibrant economic activity is expected to be seen in the Asian region. Half of the economists expect China’s economic growth this year to be moderate and 43 percent strong.
While 93 percent of economists expect the economy to grow at least moderately in the East Asia and Pacific region, 50 to 75 percent expect weak or very weak economic growth in the US and Europe. , respectively.
THE HIGHEST INFLATION EXPECTATION IS IN EUROPE
90 percent of economists predict that inflation in Europe and 68 percent in the US will remain high or very high this year. Inflation will also remain high in sub-Saharan Africa, Latin America and the Caribbean, according to two-thirds of leading economists.
Although half of the economists surveyed expect record inflation in the Middle East and North Africa, only 14 percent believe these levels will be seen in China.
In this context, according to 79 percent of economists, central banks face a balance between controlling inflation and maintaining stability in the banking sector, while 82 percent expect interest rate increases to slow down due to to concerns about financial stability.
On the other hand, 76 percent of economists think central banks will have a hard time bringing inflation down to target levels.
With inflation remaining high, 76 percent of economists forecast that the cost of living will remain at the “crisis” level in many countries, and this will be an “acute” problem, especially in developing countries.
HIGH RISK OF NEW BANK FAILURE
Despite the recent bank failures and turbulence in the global financial system, 69 percent of economists think these developments will have limited impact.
However, 67 percent of economists see the possibility of further bank failures and “serious financial problems” this year as quite high.
According to 80 percent of economists, the business world will have difficulty finding financing and investment will decline.
In her assessment of the report, World Economic Forum Director General Saadia Zahidi stated that the report reveals the uncertainty created by current economic developments, saying: “Labor markets appear resilient for now, but growth remains stagnant. We see that global tensions are deepening and the cost of living is high in many countries. These findings confirm the urgent need for global policy coordination in the short term and urgent cooperation for a new growth plan that consolidates sustainability and resilience in the long term.” she used the phrases. (AA)E