WEF: Economists warn of dire consequences due to fragmentation of global economy

The World Economic Forum’s community of chief economists expects lower economic activity, higher inflation, lower real wages and greater food insecurity globally in 2022,  pointing to the devastating human consequences of the fragmentation of the global economy, according to a report at the annual WEF meeting at Davos.

According to the report, the majority of chief economists surveyed by the forum expect high or very high inflation in 2022 in all markets except China and East Asia – with 96 per cent believing in high or very high inflation in the US, 92 per cent for Europe and 86 per cent for Latin America.

In parallel, two-thirds of chief economists expect that average real wages will decline in the near term in advanced economies, while one-third are uncertain. Ninety percent of those surveyed expect average real wages to fall across low-income economies.

These economists also expect that over the next three years, food insecurity to be most severe in sub-Saharan Africa and in the Middle East and North Africa. At the current trajectory, the world is on track for the worst food crisis in recent history, compounded by the additional pressure of high energy prices, the Community stated.

“We are at the cusp of a vicious cycle that could impact societies for years. The pandemic and war in Ukraine have fragmented the global economy and created far-reaching consequences that risk wiping out the gains of the last 30 years. Leaders face difficult choices and trade-offs domestically when it comes to debt, inflation and investment. The World Economic Forum’s Annual Meeting this week will provide a starting point for such collaboration”, said Saadia Zahidi, Managing Director at WEF.

The Annual Meeting 2022 of World Economic Forum is taking place from May 22-26 in Davos, Switzerland.

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