Economists are divided on the economic outlook and the likelihood of a global recession in 2023, as revealed in a new report from the World Economic Forum on Tuesday.
Saadia Zahidi, WEF managing director, said that the latest Chief Economists Outlook report highlights the uncertainty of current economic developments.
"Labour markets are proving resilient for now, but growth remains sluggish, global tensions are deepening, and the cost of living remains acute in many countries," Zahidi said.
In a survey featured in the report, experts are evenly divided on the prospects for the global economy, with equal shares of 45% saying that a global recession is likely or unlikely this year.
Economists said they expect both growth and inflation dynamics to vary widely across regions.
On the economic policy front, 72% predict proactive industrial policy to become an increasingly widespread phenomenon over the next three years.
Although a majority do not see recent financial-sector disruption as a sign of systemic vulnerability, further bank failures and turbulence are considered likely this year.
However, expectations for growth strengthened since the last report was released in January 2023, but the outlook differs sharply across regions.
The most buoyant activity is expected in Asia, with China's reopening expected to drive a significant rebound for the country and to bolster activity across the continent.
More than 90% of chief economists expect at least moderate growth in both East Asia, the Pacific and South Asia.
At the other end of the spectrum, three-quarters of chief economists still expect weak or very weak growth in Europe.
In the United States, respondents were more optimistic in March-April than in January, but they are still divided on the outlook.
US growth prospects have been clouded by heightened uncertainty on financial stability and the pace and extent of monetary policy tightening.
Most economists expect high inflation across the world, while 76% of chief economists said they expect the cost of living to remain acute in many countries.
The dynamics are particularly stark in Europe and the US, where large majorities of the chief economists (90% and 68%, respectively) expect high or very high inflation this year.
China remains an outlier on inflation, with only 14% expecting high inflation.
Despite the recent bank collapses, economists expressed confidence in the systemic integrity of global markets.
However, two-thirds highlighted the likelihood of further bank failures and disruption, while more than 80% said they expect businesses to find bank loans more difficult to secure.
Economists were unanimous in anticipating further changes in the structure of global supply chains.
When asked which business strategies they expect to contribute to this reconfiguration, they highlighted adaptation to geopolitical fault lines (94%), the prioritisation of resilience over efficiency (91%), diversification of suppliers (84%) and an increased focus on environmental sustainability (77%).
Zahidi said the results confirmed the urgency for short-term global policy coordination as well as "longer-term cooperation around a new framework for growth that will hardwire inclusion, sustainability and resilience into economic policy".
The WEF's Growth Summit takes place in Geneva from 2-3 May and will address the global growth outlook, hotspots in the global economy, and questions of competition and cooperation, as well as employment, skills and equity.
