Bolger Brende, chairman of the World Economic Forum, gave a grim outlook for the global economy, saying that if the right economic measures are not taken, the world will face a decade of low growth.
Speaking at the World Economic Forum’s “Special Session on Global Cooperation, Growth and Energy for Development” in Saudi Arabia on Sunday, he warned that global debt ratios were close to their highest levels since the 1820s and that there was “stagflation” in advanced economies. “risk.
“Global growth this year is (estimated) to be about 3.2%,” he told CNBC’s Dan Murphy. “That’s not bad, but it’s not what we’re used to — trend growth has been 4% for decades.
Asked how to avoid a period of low growth, he explained: “We cannot get into a trade war, we still have to trade with each other.”
“Trade will change, there will be more nearshoring and friend-shoring in global value chains, but we shouldn’t lose the baby with the bathwater… Then we have to address the global debt problem. We also We haven’t seen this kind of debt since the Napoleonic Wars and our debt as a share of global GDP is close to 100%,” he said.
He said governments need to consider how to reduce debt and take the right fiscal measures without getting into a situation that triggers a recession. He also said that continued inflationary pressure and generative artificial intelligence may bring opportunities to developing countries.
Borge Brende, Chairman of the World Economic Forum (WEF).
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His warnings dovetail with a recent report from the International Monetary Fund, which noted that global public debt rose to 93% of GDP last year, still 9 percentage points above pre-pandemic levels. The International Monetary Fund predicts that global public debt may approach 100% of GDP by the end of this century.
The IMF also singled out the high debt levels of China and the United States, saying the latter’s loose fiscal policies were putting pressure on interest rates and the economy. Dollar This in turn drives up financing costs around the world, exacerbating pre-existing vulnerabilities.
Earlier this month, the International Monetary Fund slightly raised its global growth forecast, saying the world economy had proven “astonishingly resilient” despite inflationary pressures and shifts in monetary policy. Global economic growth is currently expected to be 3.2% in 2024, a slight increase of 0.1 percentage point from the earlier forecast in January.
The biggest risk facing the global economy right now is “the geopolitical recession that we face,” the World Economic Forum’s Brende said on Sunday, highlighting recent tensions between Iran and Israel.
“There’s so much unpredictability that it can easily get out of control. If Israel and Iran escalate the conflict, we could see oil prices hit $150 overnight. That would certainly do a lot of damage to the global economy,” he said.
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