Borg Brende, President of the World Economic Forum, gave a stark view of the global economy, saying that the world faces a decade of low growth if the right economic measures are not implemented.
Speaking on Sunday at the World Economic Forum's “Special Meeting on Global Cooperation, Growth, and Energy for Development” in Riyadh, Saudi Arabia, he warned that global debt ratios were approaching levels not seen since the 1820s and that there was a risk of “stagflation.” “For advanced economies.
“Global (estimated) growth this year is about 3.2 percent. That's not bad, but it's not what we're used to — the growth trend has been 4 percent for decades,” he told CNBC's Dan Murphy, adding that there was There is a risk of a slowdown like the one we saw in the 1970s in some major economies.
“We cannot get into a trade war, we still have to trade with each other,” he explained in response to a question about avoiding a period of low growth.
“Trade will change and global value chains will change – there will be more near-term support and friend support – but we shouldn’t throw the baby out with the bathwater… Then we have to address the global debt situation. We haven’t seen this kind of debt for years,” he said. Napoleonic Wars, we are approaching 100% of global GDP in debt.”
He said governments need to look at how to reduce this debt and take the right fiscal measures without entering a situation that leads to recession. He also pointed to ongoing inflationary pressures and that generative AI could be an opportunity for the developing world.
Borge Brende, President of the World Economic Forum.
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His warning is consistent 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 higher than pre-pandemic levels. The International Monetary Fund expects global public debt to approach 100% of GDP by the end of the decade.
The Fund also pointed to rising debt levels in China and the United States, saying the latter's loose fiscal policy was putting pressure on interest rates and inflation. dollar This then drives up financing costs around the world, exacerbating pre-existing vulnerabilities.
Earlier this month, the International Monetary Fund raised its global growth forecasts slightly, saying the global economy had proven “surprisingly resilient” despite inflationary pressures and monetary policy shifts. It now expects global growth of 3.2% in 2024, a modest increase of 0.1 percentage point from its previous forecast in January.
The biggest risk facing the global economy now is “the geopolitical recession we face,” the World Economic Forum's Brende said on Sunday, highlighting recent tensions between Iran and Israel.
“There is a lot of unpredictability, and you can easily get out of control. If Israel and Iran had escalated this conflict, we could have seen the price of oil reach $150 overnight. This of course would be very devastating for the global economy.” He said.
