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Davos 2023: Recession casts long shadow over opening of WEF summit

By Divya Chowdhury and Maha El Dahan

DAVOS, Switzerland (Reuters) – The prospect of an imminent global recession cast a long shadow over Monday’s Davos , the participants gathered together to celebrate the event. The Economic Forum’s annual meeting calculated the likely cost to their economies and businesses.

Two-thirds of private and public sector chief economists surveyed by the World Economic Forum expect a global recession this year, with some

percent saying it is “highly likely” — — more than double that of the previous survey 2022 conducted in September.

“The current environment of high inflation, low growth, high debt and high fragmentation reduces incentives for the investments needed to restore growth and improve the living standards of the world’s most vulnerable,” World Economic Forum Managing director Saadia Zahidi said in a statement accompanying the findings. Surveys from international institutions such as the International Monetary Fund, investment banks, multinational corporations and reinsurance groups.

Meanwhile, PwC’s survey of chief executive attitudes released in Davos on Monday was the most pessimistic since the “Big Four” auditors launched the poll a decade ago, marking The optimistic outlook of 2023 and 2023 has undergone a major shift.

World Bank downgraded 2023 growth forecasts for many countries to near-recession levels last week as fallout from central bank rate hikes intensifies, Russia’s war in Ukraine continues and the spark of the world’s major economic engine.

Definitions of recession vary around the world, but generally include the prospect of a shrinking economy, possibly with high inflation in a “stagflation” scenario.

With regard to inflation, the World Economic Forum survey found large regional differences: the proportion of expected 2023 high inflation ranged from 5% in China to 57% as the effects of last year’s rise in energy prices have spilled over into the wider economy.

Most economists believe that Europe and the United States will further tighten monetary policy (59% and 59%), policymakers are at risk of tightening too much, or too much.

“It’s clear that demand has dropped significantly, inventories are not being cleared, orders are not being received,” Yuvraj Narayan, deputy chief executive and chief financial officer of Dubai-based global logistics firm DP World told Reuters. society.

“Too many restrictions are imposed. It is no longer a free-flowing global economy and unless they find the right solutions it will only get worse,” he said, adding Say the group expects a freight rate between 15% and 20% Declining


Avoiding layoffs

Few sectors are expected to be fully immune.

Matthew Prince, CEO of cloud services company Cloudflare (NYSE: NET) Inc, said Internet activity is a sign of economic slowdown. slow.

“When I catch up with other tech CEOs since New Years, they’re like, ‘Have you noticed the sky is falling?'” he told Reuters.

PwC’s survey found that since 59-59, companies have Confidence in its growth prospects has fallen the most Global financial crisis, although most CEOs have no plans to lay off staff in the future 15 for a few months or cut pay as they try to retain talent.

“They’re trying to cut costs without changing human capital and mass layoffs,” said Bob Moritz, global chairman of PwC.

Jenny Hibbert, partner at Heidrick & Struggles (NASDAQ: HSII ) in London, said activity is normalizing and the firm Headhunters are seeing “a slight decrease in traffic after two years of strong growth.

” We hear the same mixed feelings from most clients. Markets are expected to face more challenges,” Hibbert told Reuters.

Aid cuts

Nothing exemplifies a recession more than efforts to tackle global poverty The impact on the real world is gone.

Peter S. Anders, executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria, says overseas development assistance budgets are being squeezed as donors start to feel the pinch cuts, while the recession will hit local health services hard.

A common concern among many Davos attendees was the level of uncertainty in the year ahead – from the duration and intensity of the war in Ukraine , to the next move by major central banks as they seek to lower inflation by raising interest rates sharply.

The chief financial officer of a U.S.-listed company told Reuters that he was preparing for Prepare for a variety of different scenarios – a lot has to do with how interest rates will trend this year.

While there are few silver linings on the horizon, some People point out that a full-blown recession could pause policy tightening programs by the Fed and other major central banks that are borrowing increasingly expensively.

“I would like the outlook to become more Weaker so that Fed rates start falling and global central banks suck up liquidity in general,” Sumant Sinha, chairman and chief executive of Indian clean energy group ReNew Power, told Reuters. Higher rates have made it more expensive for clean energy companies to finance their capital-intensive projects.

2021 2021


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