The World Economic Forum’s chief economist Outlook report on Monday warned of dire humanitarian consequences from the split in the world economy and said developing economies face the risk of a debt crisis and trade offs between food and energy security.
Although inflation expectations are highest in the United States, after Europe and Latin America, real wages are forecast to fall further in both high and low income economies.
Further, the report points out that the world is facing the worst food insecurity in recent history – particularly in the Middle East and North Africa, sub-Saharan Africa and South Asia.
Multinational companies are rearranging the supply chain along geopolitical fault lines, risking a new economic iron curtain and further price spirals.
Here at the WEF Annual Meeting 2022, expressing their views, the community of chief economists of the World Economic Forum said that they anticipate the destructive human consequences of global economic downturn, high inflation, low real wages and greater food insecurity in 2022. The world economy.
Contrary to previous expectations of recovery, the majority of respondents in the recent survey expect only a moderate economic outlook in the United States, China, Latin America, South Asia and the Pacific, East Asia, sub-Saharan Africa and the Middle East and North Africa. 2022. In Europe, the majority expects the economic outlook to be weak
The choices of both business and government are expected to lead to greater fragmentation in the world economy and unprecedented changes in the supply chain, creating a perfect storm of instability and uncertainty.
These patterns are expected to create more difficult trade-offs and choices for policymakers, and – without greater coordination – stun human costs.
“We are on the brink of a vicious cycle that could affect society year after year. Ukraine’s epidemics and wars have shattered the world economy and created far-reaching consequences that threaten to wipe out the profits of the last 30 years, ”said Sadia Zahidi, managing director of the WEF.
Leaders face tough choices and trade-offs internally in terms of debt, inflation and investment. However, business and government leaders also need to recognize the urgent need for global cooperation to address the economic woes and hunger of billions of people around the world, “he added.
The war in Ukraine, the continued growth of the COVID-19 variant and the associated supply shock are affecting expectations on inflation. Most major economists surveyed by the forum expect high or very high inflation in 2022 in all markets except China and East Asia.
In parallel, two-thirds of leading economists expect average real wages to decline in the near term in developed economies, while one-third are uncertain. Ninety percent of those surveyed expect average real wages to fall in a low-income economy.
With wheat prices expected to rise more than 40 percent this year and vegetable oil, cereal and meat prices at all-time highs, the war in Ukraine is exacerbating the global hunger and cost of living crisis.
Over the next three years, leading economists expect food insecurity to be most severe in sub-Saharan Africa and the Middle East and North Africa. At the current juncture, the world is on the verge of the worst food crisis in recent history, due to the extra pressure of high energy prices.
A recent 11-nation survey conducted by Ipsos with the World Economic Forum also showed high levels of public economic frustration in the face of the cost of living crisis.
The World Bank expects energy prices to rise by more than 50 percent in 2022, before easing in 2023-24, as policymakers face a balance of energy insecurity risks against the transition to green energy.
Most of the leading economists surveyed expect policymakers to try to address both challenges at the same time.
However, a clear majority of respondents expected energy conservation priorities based on carbon-intensive sources rather than green sources in all regions except Europe and China.