Borge Brende, president of the World Economic Forum, gave a bleak outlook on the global economy, saying the world faces a decade of low growth unless the right economic measures are taken.
Speaking on Sunday at the WEF’s “Special Meeting on Global Cooperation, Growth and Energy for Development” in Saudi Arabia, he warned that global debt ratios are close to levels not seen since the 1820s and that There is a risk of “stagflation” for advanced economies.
“Global growth [estimate] this year it is around 3.2 [%]. “It’s not bad, but it’s not what we were used to – trend growth has been 4% for decades,” he told CNBC’s Dan Murphy, adding that some major economies are at risk of a slowdown like the 1970s exist.
“We can’t get into a trade war, we still have to trade with each other,” he said when asked how to avoid a period of low growth.
“Trade will change and global value chains will change – there will be more near-shoring and friend-shoring – but we shouldn’t throw the baby out with the bathwater… Then we have to deal with the global debt situation. We don’t have that. “With this kind of debt since the Napoleonic Wars, we are approaching debt of almost 100% of global GDP,” he said.
He said governments need to think about how they can reduce this debt and take the right fiscal measures without ending up in a situation where there is a recession. He also pointed to persistent inflationary pressures and that generative artificial intelligence could be an opportunity for developing countries.
Borge Brende, President of the World Economic Forum (WEF).
Bloomberg | Bloomberg | Getty Images
His warning is in line with a recent report from the International Monetary Fund, which found that global government debt rose slightly last year to 93% of GDP and was still 9 percentage points above pre-pandemic levels. The IMF predicted that global government debt could reach nearly 100% of GDP by the end of the decade.
The fund also pointed to high debt levels in China and the United States, saying loose fiscal policies in the latter were putting pressure on interest rates dollar which then drives up financing costs worldwide – and makes existing vulnerabilities even worse.
Earlier this month, the International Monetary Fund slightly raised its global growth forecast, saying the global economy had proven “surprisingly resilient” despite inflationary pressures and monetary policy changes. It now expects global growth of 3.2% in 2024, a modest increase of 0.1 percentage points from its previous January forecast.
WEF’s Brende said on Sunday that the biggest risk to the global economy right now is “the geopolitical recession we are facing,” citing recent tensions between Iran and Israel.
“There’s so much unpredictability and it’s easy to get out of control. If Israel and Iran escalated this conflict, we could have seen an oil price of $150 overnight. And of course that would be very damaging to the global economy,” he said.
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2024-04-28 08:37:30
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