The multiple threats weighing on the world economy were at the heart of discussions on Monday streaked with concern between representatives of the international economic and political elite gathered at the annual summit in Davos, some of which were even mentioned the risk of a general recession.
This World Economic Forum at the Swiss station, a traditional meeting of political leaders and big bosses, opened when inflation had never been so high in forty years, in the United States as in Europe.
This price increase has offended consumers, weighing on corporate profits in many sectors and causing some major central banks, first of all, the US Federal Reserve, to begin a cycle of raising interest rates.
At least four nested seizures
The problem was exacerbated by Russia’s military offensive in Ukraine, launched on February 24, which increased tension over food and energy prices, and China’s repeated lockdown in the face of COVID-19. , disrupting supply chains.
We have at least four crises, which are interrelated. Our inflation is high […] we have an energy crisis […] we have food insecurity and we have a climate crisis. And we cannot solve problems if we focus on just one of these crises.and German Vice-Chancellor Robert Habeck.
If none of these issues are resolved, I am really afraid that we will go straight into a global recession with huge consequences. […] in global stabilityadded Robert Habeck, also Minister of Economy and Climate.
the IMF unpredictable recession at this point
The International Monetary Fund (IMF) last month lowered its growth forecast for the world economy for the second time this year, citing the war in Ukraine and calling inflation a clear and overt doom for many countries.
Kristalina Georgieva, Managing Director of IMFtold Davos on Monday that the war, the restriction of financial conditions and price shocks, especially on food products, had still, because, clearly cloudy perspectives.
Asked if he expected the recession, however, he replied: No, not at this point, but that doesn’t mean it’s out of the question.
Christine Lagarde, president of the European Central Bank (ECB), who is due to speak in Davos on Tuesday, warned that growth and inflation are heading in opposite directions, with rising prices weighing on activity and reducing inflation. purchase of household electricity.
The Russia-Ukraine war could prove a turning point for hyperglobalizationhe wrote in a blog post published on Monday on the website of ECB. This can lead to supply chains being less efficient over a period of time and, during the transition, generate more ongoing cost pressure for the economy.he added.
Christine Lagarde will also almost certainly announce the rate increase for ECB both in July and September to fight inflation, although the increase in the amount of credit is theoretically slowing growth.
” We know, everyone knows from day one, that this war is bad news for the economy. “
Less growth and more inflationdeclared the Governor of the Banque de France, François Villeroy de Galhau. This is the price we agreed to pay together to protect our values […] It’s worth paying that price.
Source: Radio-Canada