Not just because of the war: Before the meeting in Davos, economists talked about why the world is facing a recession

Saadia Zahidi, Managing Director of the World Economic Forum, believes that in 2023, the global economy will face tangible reductions in investment needed by vulnerable people around the world.

Many of the top private and public sector economists surveyed by the World Economic Forum (WEF) expect the global economy to face a global recession in 2023. Reported by Reuters.

According to Saadia Zahidi, director general of the World Economic Forum, in 2023 the investments needed to improve the living standards of the world’s most vulnerable people are expected to decline. According to the expert, there are several reasons for this:

  • high inflation;
  • low economic growth rates;
  • high debt and fragmentation.

However, economists think a little differently about inflation: In 2023, the proportion of people expecting high inflation has increased from just 5% in China to 57% in Europe, where the impact of the rise in energy prices last year spread throughout the economy. However, many experts believe that Europe and the US will tighten monetary policy.

Meanwhile, the World Bank forecasts global GDP growth to be around 1.7% in 2023, according to Reuters. This is the lowest growth rate since the 2009 and 2020 recessions.

What awaits Ukraine in 2023?

Against the backdrop of a large-scale Russian invasion, the Ukrainian economy has had a tough year 2022, but there are already many positive factors that will affect Ukraine’s GDP growth in 2023. This applies, for example, to the operation of the power system, which quickly recovers even in conditions of massive attack.

“Ukraine’s energy system is working stably, repairs are underway, there are almost no emergency outages at the moment. There are 11.7 billion cubic meters of gas in underground gas tanks. There are 1.2 million tons of coal in the warehouses. There is money and help from partners. In addition, to purchase the necessary resources,” Prime Minister Denys Shmygal said recently.

As for the development of key sectors of the economy, survey respondents focus Experts in the article “The Second War Year. Where Ukraine will get money for pensions and salaries in 2023” name several sectors at once that can show growth in 2023.

“Agriculture, construction, metallurgy (if it recovers) – these sectors will be very positive in international markets,” says Vitaly Shapran, member of the Association of Economists and Financial Analysts.

According to CASE-Ukraine Executive Director Dmitry Boyarchuk, in 2023 almost all sectors of the Ukrainian economy will face a very difficult period of struggle for survival.

“The key sector of the economy – the agricultural sector – will decline faster than this year in 2023, so the overall economy will be in a difficult position. Which will be the main sectors? Service sectors such as agriculture, food processing, light industry and some IT. In general, the main source of demand is precisely it is created with foreign support, the money comes here, these are soldiers’ salaries, these are taxes, these are sales from those salaries, these are sales, thanks to these expenses. The economy, everything is quite sad,’ he explained.

We also recall that according to a survey conducted by the recruitment portal Work.ua, most employers plan to increase salaries in the range of 8% to 30% in 2023, depending on the situation in Ukraine and the level of competition. for experts. But at the moment, unfortunately, it is impossible to talk about bringing the level of payroll to the pre-war level.

Source: Focus

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