A majority of the World Economic Forum's chief economists expect a global recession in 2023, besides seeing geopolitical tensions continuing to shape the global economy. They also anticipate further monetary tightening in the US and Europe.
These findings were part of the 'Chief Economists Outlook: January 2023' report launched at the ongoing five-day World Economic Forum annual meeting.
"Almost two-thirds of chief economists believe a global recession is likely in 2023; of which 18 per cent consider it extremely likely - more than twice as many as in the previous survey conducted in September 2022. A third of respondents consider a global recession to be unlikely this year," WEF said in a release on Tuesday (local time).
The World Economic Forum said there is a "strong consensus" that the prospects for economic growth in 2023 are bleak, especially in Europe and the US.
All of the chief economists surveyed expect "weak or very weak" growth in 2023 in Europe, while 91 per cent expect "weak or very weak" growth in the US.
For China, the respondents were almost evenly split between those who expect weak or strong growth.
"Recent moves to unwind the country's highly restrictive zero-Covid policy are expected to deliver a boost to growth, but it remains to be seen how disruptive the policy shift will be, particularly in terms of its health impacts," said the release.
On the inflation side, the WEF chief economists see significant variation across regions, with the proportion expecting high inflation in 2023, ranging from 5 per cent for China to 57 per cent for Europe.
"Following a year of sharp and coordinated central bank tightening, the chief economists said they expect the monetary policy stance to remain constant in most of the world this year. However, a majority expect further tightening in Europe and the US," the release said, adding 2023 is likely to involve a difficult balancing act for monetary policy-makers between tightening too much or too little.
The US central bank's policy rate is now in a target range of 4.25-4.50 per cent, the highest level in 15 years, and notably, it was near zero in the early part of 2022. Prior to the recent 50 basis points hike, there has been a fourth consecutive hike of 75 basis points magnitude.
The next US monetary policy meeting is scheduled for January 31 and February 1.
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