Global growth prospects remain anaemic and the risk of a global recession is high, according to the World Economic Forum (WEF) Chief Economists Outlook for January 2023. Almost two-thirds of economists surveyed by WEF expect a recession this year. Almost one in five respondents now consider a global recession to be extremely likely in 2023.

This is more than twice as many as in the previous survey in September 2022.

The chief economists surveyed expected the outcomes of the latest shocks to have been worse, the impending downturn to be relatively short-lived and the current resilience to form a cornerstone of future recovery, WEF said on its website.

Businesses face a ‘triple challenge’ at the beginning of 2023: continued high prices of key inputs, alongside tightening monetary policy and weakening demand, the report said.

Nine out of 10 economists surveyed expect weak demand to exert a ‘significant drag on business activity this year’, while 87 per cent expect the same of elevated borrowing costs and more than 60 per cent expect the same of higher input costs.

Of these, energy prices are a key factor, particularly in Europe, which threatens the competitiveness of the region’s producers and runs the risk of diverting supply chains and business activity away from the region.

Other potential business headwinds that could also impact this year include talent shortages, with 45 per cent of respondents saying they were ‘somewhat or extremely likely’ to exert a drag on business activity. But as businesses look towards cost-cutting measures, talent availability is expected to be less of a concern.

A lower proportion of respondents (36 per cent) said they expected regulatory and policy uncertainty to impact business activity, while only 23 per cent see supply chain disruptions to have a significant effect.

Fibre2Fashion News Desk (DS)

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