The president of the World Economic Forum, Borge Brende, provided a dire assessment of the state of the world economy, stating that if the proper policies are not implemented, the world would see a decade of slow development.
Speaking on Sunday in Riyadh, Saudi Arabia, during the WEF's "Special Meeting on Global Collaboration, Growth, and Energy for Development," he issued a warning that industrialised countries face the prospect of "stagflation" since global debt ratios are approaching levels not seen since the 1820s.
This year, the [estimated] worldwide increase is around 3.2 [%]. The average growth used to be 4% for decades, so it's not horrible, but it's not what we were accustomed to," he said to CNBC, adding that there was a chance of a slowdown similar to what was saw in the 1970s in several key economies.
“We cannot get into a trade war, we still have to trade with each other,” he explained when asked about avoiding a period of low growth.
“Trade will change and global value chains — there will be some more near-shoring and friend-shoring — but we shouldn’t lose the baby with the bathwater ... Then we have to address the global debt situation. We haven’t seen this kind of debt since the Napoleonic Wars, we are getting close to 100% of the global GDP in debt,” he said.
According to him, governments must think about how to lower that debt and implement the appropriate fiscal policies without risking triggering a recession. He also mentioned the possibility of opportunities for the developing countries due to generative artificial intelligence and ongoing inflationary pressures.
His caution is in line with a recent IMF analysis that showed the world's public debt increased to 93% of GDP in year, which is still 9% greater than levels seen before to the epidemic. By the end of the decade, the IMF predicted that the global public debt may approach 100% of GDP.
The Fund also called attention to the high levels of debt in China and the US, claiming that the latter country's lax fiscal policies increase interest rates and the value of the dollar, which in turn raises borrowing costs globally and exacerbates already precarious situations.
The International Monetary Fund increased its prediction for global growth earlier this month, noting that despite changes in monetary policy and inflationary pressures, the global economy has shown to be "surprisingly resilient." It has raised its prediction for global growth in January by 0.1 percentage points to 3.2% in 2024.
Bringing up the recent tensions between Iran and Israel, WEF's Brende stated on Sunday that "the geopolitical recession that we are faced with" is currently the largest danger to the world economy.
“There is so much unpredictability, and you can easily get out of control. If Israel and Iran escalated that conflict, we could have seen an oil price of $150 overnight. And that would of course be very damaging for the global economy,” he said.
(Source:www.fortune.com)
Speaking on Sunday in Riyadh, Saudi Arabia, during the WEF's "Special Meeting on Global Collaboration, Growth, and Energy for Development," he issued a warning that industrialised countries face the prospect of "stagflation" since global debt ratios are approaching levels not seen since the 1820s.
This year, the [estimated] worldwide increase is around 3.2 [%]. The average growth used to be 4% for decades, so it's not horrible, but it's not what we were accustomed to," he said to CNBC, adding that there was a chance of a slowdown similar to what was saw in the 1970s in several key economies.
“We cannot get into a trade war, we still have to trade with each other,” he explained when asked about avoiding a period of low growth.
“Trade will change and global value chains — there will be some more near-shoring and friend-shoring — but we shouldn’t lose the baby with the bathwater ... Then we have to address the global debt situation. We haven’t seen this kind of debt since the Napoleonic Wars, we are getting close to 100% of the global GDP in debt,” he said.
According to him, governments must think about how to lower that debt and implement the appropriate fiscal policies without risking triggering a recession. He also mentioned the possibility of opportunities for the developing countries due to generative artificial intelligence and ongoing inflationary pressures.
His caution is in line with a recent IMF analysis that showed the world's public debt increased to 93% of GDP in year, which is still 9% greater than levels seen before to the epidemic. By the end of the decade, the IMF predicted that the global public debt may approach 100% of GDP.
The Fund also called attention to the high levels of debt in China and the US, claiming that the latter country's lax fiscal policies increase interest rates and the value of the dollar, which in turn raises borrowing costs globally and exacerbates already precarious situations.
The International Monetary Fund increased its prediction for global growth earlier this month, noting that despite changes in monetary policy and inflationary pressures, the global economy has shown to be "surprisingly resilient." It has raised its prediction for global growth in January by 0.1 percentage points to 3.2% in 2024.
Bringing up the recent tensions between Iran and Israel, WEF's Brende stated on Sunday that "the geopolitical recession that we are faced with" is currently the largest danger to the world economy.
“There is so much unpredictability, and you can easily get out of control. If Israel and Iran escalated that conflict, we could have seen an oil price of $150 overnight. And that would of course be very damaging for the global economy,” he said.
(Source:www.fortune.com)
