WEF 2022: Outlook grim for global recession but experts weigh how much

As the Russia-Ukraine conflict continues, central bankers and economists are fearful that the world may be headed for recession. While the supply chains remain choked as many of China’s factories are still closed due to Covid-19 spread, markets are panicky, with technology stocks in particular distress, and inflation is running high.

“We are not in a recession yet, but the signs are not good,” said David Rubenstein, co-founder and co-chairman of Carlyle at the World Economic Forum's (WEF) Annual Meet on Tuesday.

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“We have downgraded projections for growth for 143 countries, accounting for 86 per cent of GDP,” said François Villeroy de Galhau, governor of the Central Bank of France.

In addition to China’s Covid-19 lockdowns, he cited the appreciation of the dollar and commodity price shocks in fuel resulting from the Russo-Ukrainian war.

But fuel isn’t the only commodity experiencing precipitous price increases – food may prove to be even more critical.

“We can shrink use of petrol,” Galhau said, “but we have to eat every day.” 

Emphasising the significance of food, Jane Fraser, CEO of Citi, said, “Food is, I think, the big worry because that could be the wild card, when people are hungry around the world, and there’s going to be one-and-a-half-billion hungry people without the means or the access to food, particularly in Africa."

The grim outlook was highlighted in the World Economic Forum’s quarterly Chief Economists' Outlook, published earlier on Tuesday. The key findings include declining real wages in both high- and low-income countries, political divisions creating geo-economic and supply chain fault lines, and persistent inflation in the US, Europe and Latin America.