 Hello and welcome to this special agenda dialogue on the future of the global economy. I'm Adrian Monk here at the World Economic Forum in Geneva, Switzerland. Joining us to discuss the global economic outlook are Rima Bhartia from Bahrain. She's with the Gulf Investment Bank. We have Guy Miller from Zurich Insurance in Switzerland. And in Singapore, we have Santi Satiratai with Sea Limited. So joining me to discuss this report, the lead on it here in Geneva, Saadia Zahidi. Saadia, thank you. Can you begin perhaps by telling us the headlines from this year's global economic outlook? Thanks Adrian. The chief economist outlook is the views of 50 of the top chief economists from various sectors, various geographies telling us where the global economy is headed. We do this exercise every few months. The last time we did this was in May 2022 and the headline was that we are in the midst of a perfect storm. Now here in September, we're looking at a situation that became worse and the outlook has darkened. So for example, this time 70% of our respondents believe that the global economy is headed for a recession within the course of 2022 or sometime in 2023. Now at the same time, the picture does look different around different parts of the world. And we have to be conscious that what is happening right now in Europe is not quite the picture around the world. Europe is certainly the area in greatest trouble, if you will, when we look at the results of the outlook. So for example, nine out of 10 respondents expect growth to be weak or very weak when it comes to Europe. Respondents are marginally less pessimistic when it comes to China with 67% expecting weak or very weak growth in 2022 with things looking a little better in 2023. The United States is the opposite. Things look pretty good at the moment. But there is a sense that growth may be weaker when it comes to 2023. The Middle East and North Africa region looks set to perform particularly well, seven out of 10 respondents expecting growth, and again not surprising given where energy prices currently are. In South Asia, generally positive outlook, but the set of people that are expecting a negative outlook has grown from the last time we did this. It was 7% in May. It's 20% this time around. In Central Asia, the set of people that are expecting growth to become weaker has risen again from 20% to 40%. And finally when it comes to sub-Saharan Africa and Latin America, the picture is mixed. In sub-Saharan Africa, now a solid majority, 60%, are expecting a slowdown in growth in 2023, whereas in Latin America things are looking a little more upbeat with a solid 56% expecting moderate growth. In addition, there are a number of other trends that get highlighted in this month's chief economist outlook. Inflation is expected to remain very high, although the outlook is better than it was in May. Real wages unsurprisingly will continue to fall and are expected to not keep pace with this rise in prices. 9 in 10 expect real wages to decline in low-income economies and 8 in 10 in developing economies. Food and energy crisis are continued to remain very large risks and unsurprisingly social unrest is expected to continue to rise as the cost of living continues to buy some of the lowest income across developing and developed economy populations. Arima, I turn to you and say you're based in the Middle East. How does it look from your perspective? Are we heading into a truly global recession? Thank you so much and thank you for having me here today. I think to answer that question around recession, you know, it's really important to put things into perspective. First and foremost, we started 2022 on a relatively positive note. We were still trying to deal with a lot of the variants of COVID. There was the inflation concern, central bank concern, but it was something that obviously appeared quite manageable. I mean, what a difference a quarter makes. By the end of March, we were in a completely different situation, you know, with the Russian-Ukraine conflict as well as the China lockdowns. I mean, that certainly just changed that entire global narrative into negative. But it's really important to highlight here rather than, you know, regurgitating all that's been going on. I think it's really important to highlight that we are sort of traversing through this new world of policy paradoxes, you know, stormy conditions and, you know, a lot of opportunities at the same time. I mean, there's all occurring at the same time. So are we heading in for a recession? The likelihood is yes, that, you know, given how the slowdown is transpiring. I think we are heading in for a slowdown now. How severe that slowdown is and how much of it you want to label as a recession, I think it depends. But this is supply shock. And that's something we have to keep in mind. The global environment is where it is today because of the war and the impact on supply because of COVID lockdowns and the impact on supply. And because of the pandemic and supply was still trying to recover from there. So all the story is around that. So I think it's really important to keep that in mind that if one were to see China coming out of this lockdown, which it looks like it even they're already starting to ease some of that pressure. And we are seeing the impact of central bank action on demand, which is going to tackle some part of that inflation. Then we are seeing inflationary pressures coming down. So I think then we're looking at a more reasonable environment of prices. And that in itself will mean that, you know, from a global growth perspective, things are going to slow down. Things are going to look worse than they are today. But with the inflation situation improving, I think growth will start to pick up thereafter. The supply side is really important to highlight because that is the type of recession that is manageable once many of these situations get resolved, supply will bounce back as will growth. And I think it's really important to focus on that part. Thanks, Rima. Guy, if I can turn to you. Rima spoke about some of the things that are impacting on the supply side. The Chinese government will transition in March 2023 with some optimistic signs that there might be a loosening in some of the lockdown restrictions by then. What's your inflation horizon? Have we hit the peak or are we just surfing the crest of the wave? Yeah, maybe just to pick up a little bit from what Rima said. I mean, the supply side has clearly been an issue. And, you know, we are more optimistic on that as well, seeing some of the bottlenecks really ease up. We're seeing whether it's supply or delivery times, inventories, backlogs, all of that is getting better. I think one of the big issues right now for the central banks in particular, of course, is actually the demand side. And again, this relates back to the pandemic, the excesses that we had seen from that that resulted in consumers in particular having more money in their pockets, more money and cash reserves and an insatiable demand almost for the things that they couldn't buy during the last two or three years. So we have seen that transition from the good side, which was clearly out of balance towards the service sector. But that still leaves the central banks with a problem because, as you said, inflation is still way above their targets. And you've got pretty much full employment in most economies. And how do you deal with that? And really the only way they can deal with that is by trying to, frankly, reduce the demand by slowing down the economy through hiking interest rates. And from that perspective, my concern, actually, is that we're almost in a race to the top. Really, since June, we've seen a dramatic pick up in the number and the scale of these rate hikes that we're seeing. And we all know that takes quite a long time to feed into the real economies. And they're not being able to take breath right now because there is there is so much pressure, given the high levels of inflation, to keep going, to keep moving these rates higher. But to that point, again, as we look further out, we're a little bit more optimistic in terms of the inflation side as well. Clearly, these much higher rates will have an impact in slowing demand. You just need to look at the US housing market, where we've seen 30 year mortgage rates jump from 3% in December to 6.5%. Now, this is having a tangible impact on the demand for homes. It has a tangible impact in terms of consumers being able to to fund their their borrowing and their debt costs. So that will slow, I think, on the demand side as well. And if you put that together with a lot of the things that people don't talk about anymore, remember, we were all concerned about chip prices, lumber prices, steel, copper prices. All of these things a year ago were in everybody's newspapers. Right now, these things that I just mentioned, they're not down two or three percent, but they're down 10, 15, 20, in some cases, 50 and 60 percent from the highs that we have seen last year. So a combination, I think, of these supply side measures that the REMA spoke about, the commodity price, the base effects beginning to kick in and, frankly, a precipitous slowdown in global growth, particularly in areas such as Europe and the US, I think ultimately will push, pull these inflation numbers down quite dramatically as we get into the back end of this year. So peak inflation, I suspect, peaking inflation. And again, we'll get the proof points of that, I think, between now and your end. Thanks, Guy. Sancy, just turning to you from Singapore, what is your perspective on some of the things that businesses and policymakers should be doing to tackle this very immediate cost of living crisis that's impacting employees, it's impacting firms and it's impacting governments? Absolutely. Thanks for that. And I think that's one of the very important issues that facing policymakers and business alike. I think one of the key things to remember is that this inflation is a real squeeze on the chasing power. I think it's also coming out in the survey that most people believe that the wage are not really keeping up with this spike in inflation. And especially when you consider, as REMA and Guy have said, that a lot of inflation is coming from a supply side disruption as well. And it's very concentrated around energy, around food to some extent as well. All of this is going to be a very large proportion of the basket of purchase of the lower income groups. So this is going to have an impact on poverty and impact on inequality as well. It's going to hurt those who are more fragile, kind of on the pyramid, so to speak. So I think that's kind of like the difficult policy question and kind of the key of focus that policymakers have to focus on. And I think the couple of things to kind of address this issue, at least probably have three things come to mind. I think first and foremost is that we have to recognize that actually kind of playing on the theme that REMA said that is not all bad. In fact, as we are seeing economic slowdown, especially in merchandise and goods market, we actually seeing a bit of a switch back to the service economy. You look around the world in the past few years, of course, tourism has been totally absent and we've been relying on export and merchandise to drive growth globally and a lot of economies. Now we are seeing that tourism are coming back and that's continued to see good recovery. And of course, if China were to also lift its restrictions, that can really kind of provide another leg of boost. And that's really important for a lot of the economies, especially in the region that I'm looking at. So that kind of chip back to what tourism and service economy is going to be really important. These are these are the sectors that relate to sectors which provide a lot of employment opportunities as well. So I think for the government, you have to make sure that this improvement in mobility in tourism continues. We don't want another disruption to that to happen on top of these kind of slowdown in the goods and merchandise markets. Secondly is to turn to perhaps the policy mix. Of course, margin policy is going to be focusing on inflation right now. But fiscal policy is a potential avenue to help shield some of these shocks, especially to the lower income groups. A lot of the country is not going to have as much fiscal ammunition and policy space as they did before the pandemic because they have used up a lot of that fighting the pandemic. But they still have many countries who still have some space in order to do a more targeted approach to so speak, to deliver the medicinal proverbial medicine to those who need it most. And I think that's where kind of the data become very important because you want to kind of deliver this precise fiscal stimulus only to target group to at least help cushion them against different kind of shocks. And last but not least, I think we don't talk about this anymore for some reason, but actually one of the potential super lining that we have seen the past few years was the increase in digital adoption, which has happened a lot, especially in emerging markets in Southeast Asia, for example, you've seen about 100 million new digital users or even greater than that in the past few years. And these are the traditionally the people who don't really use digital tools in the past before. So now they come online to use digital payments, they use e-commerce, many things. There's a lot more data around them. There are more opportunities for them to connect to the markets. And the question for the next part is really how can we leverage this technology and access to technology and digital adoption to better help these underserved groups? So that they can whether it is done better. So I think those kind of three key pillars, you know, ensure mobility, targeted fiscal response and ensure technology can really help serve more inclusive growth. Thanks, Senti. Got some questions here from some journalists. Andrew H. Cliff Johnson from The Financial Times has a couple of questions to put to the panel. Firstly, where do you see the most pronounced risks for stagflation? And secondly, is it the panel's view that we're entering a new economic regime in which inflation remains more elevated than in the past and where we're subject to more volatile supply chain issues on a sustained basis? So a couple of very big questions there from Andrew at the FT. Guy, do you want to jump in first on stagflation? Well, I guess in terms of the region most vulnerable, I would say it is the Eurozone. It is a region that has typically lower trend growth. As a result of that, it's always inevitable that that growth dynamic is going to be at risk. And what we're seeing here is a combination of that slower trend growth combined, of course, with this exogenous shock in terms of the energy component. So I think it's fairly clear that certainly for probably the coming year that this region is going to fit that definition of stagflation. I think as we get further right, I think some of the policies around the next-gen recovery fund, the potential to move to sustainable energy sources, that has the potential to improve things. And again, going back to what Rima said earlier, it's not just bad news. We have to take these changes, these sort of seismic shifts to be opportunities to reposition some of these economies. I think that's absolutely first and foremost. To the point about inflation rates running higher going forward, I have some sympathy with that. I mean, let's be clear about one thing. The central banks are still being very clear about what they're mandate. They are absolutely fixated in bringing inflation back towards their targets. And that is taking priority over the growth dynamic. So that's something in a way that's important. It is acting as a backstop. And it's also why having these independent central banks is so important. But when you look over the last 15 or 20 years, we saw persistent goods price deflation. And that was one of the reasons why we saw the aggregate inflation numbers being held down, service sector inflation was always running a bit hotter. The question really is, is that going to be the dynamic going forward? And I suspect not to the same extent. I think the good sector is going to be running a little bit higher than we've seen in the past for various structural reasons around geopolitics and trade. But I think it is going to be a care of more marginal. It's still going to be around these targets, even if they are slightly more on the higher side rather than the lower side. So yes, but to a lesser extent, I think, to answer the question. And Reema, do you share that view from Guy there on some of those risks? Yes, I think, well, if we if we talk about the inflation first, I think, ultimately, the central banks are going to have to tolerate a higher level of inflation. And how far can they raise rates before bringing the bringing inflation down to two percent? I mean, I think that's no longer realistic in today's world. There's so much disruption that has occurred and getting back to a more normal functioning supply chain, global supply chain at a time when there's all the talk of de globalization. There's all the talk about nearsuring of supply chains. I think these are these are potent pressures which are going to keep prices elevated for some time to come. And I think ultimately, it's just a question of the central banks coming around to accepting a higher rate and then allowing policy to normalize and allowing global growth to continue. Other than that, you know, if they continue on this path to bring it down to two percent, I think that that is going to be unachievable, achievable at the cost at a very, very painful cost of of shattering the global momentum. So I think part of it is to sort that out. We we also have so many other other issues, the labor market, what's been happening in the labor market post the pandemic. I mean, those are major shifts that are underway. There is a shift in terms of how we work, how we deliver. All of those are coming into this this understanding of around inflation. So I think central banks dislike inflation. They are going to try and suppress it as much as they can, but they will ultimately have to accept that it will be higher than what they have been traditionally wanting to achieve. Santia, we heard there from Rima about the the pressures we're seeing on the global labor market. You mentioned the digital kind of growth that we've seen in in some areas. Are there opportunities there to bring those people anew into the global labor market using the kind of digital delivery of services and other and other things? Yeah, absolutely. And I think, you know, to kind of point to one of the question was asked as well in terms of period, are we entering periods of higher volatility? I think that's definitely one of the key features we should be assuming, you know, looking forward and how businesses should adapt to that. And again, I think you bring back to the question of potential technology, what you can do. I think one key example that we've been working a lot with looking at research is understanding how the small and medium scale enterprises, which of course were really heavily impacted during the COVID times, were able to use digital technologies such as e-commerce so that they can reach new customers in different markets. Even the small firms can become exporters, cross borders, and that allows them to diversify their markets. Even if their markets are hit by certain shocks, demand slowdown supply shocks, they have more avenue to sell to the multiple markets. And I think that's kind of a good example where you can achieve somewhat better diversification because costs of such diversification become lower and more accessible for the smaller companies. So I think that's one of the good examples. The other example would be kind of within the area of digital financial service or FinTech. A lot of financial service become very important shock absorbers whether it's for the small and medium scale enterprises, as you mentioned, or other kind of low income groups as well. And then that's where the technology can potentially help because some of these groups normally would not have access to the commercial banks' credits because they lack collateral because they lack a certain credit history. But with technologies have brought about ability to use alternative data for them to access these kind of credit, these kind of loans at the time when they needed most, at the time when it's a macro slowdown. It's not really to their own faults, but because of the global macro is turning against them. So I think these are some of the examples where you can really help the underserved population using technologies, but it's not going to happen automatically, though. All of these things is that you need to require efforts to improve digital literacy. You need to improve access to Internet. You need to lower the cost of devices. Some of these things requires policy and the private sector to come together. Thanks, Santi. Let's turn to Sadiq in a moment to sum up our conversation. But one more question from the Straits Times, Shafali Rehki, who says, in the picture of doom and gloom, is there a silver lining that we should look forward to? And also, what would your advice be to businesses in terms of their priorities in the coming quarters? Rima, can I ask you, is there from where you're sitting, a silver lining to the current situation? And what would your advice be to businesses as they look to prepare themselves for the coming year ahead? I think that's a great question, because, yes, certainly there's a silver lining. And I think that is what we need to focus on in these rather dramatic times. We've got some very strong disruptors and accelerators that have come out of the pandemic. Some of these trends were there before the pandemic, but global growth was actually quite weak prior to the pandemic. There was a lot of concern about where we're heading. The pandemics provided this opportunity to really move forward on so many fronts, sustainability, ESG, whether we're talking of changing of supply chains, looking at health, health care, health tech reforms in that sector, you know, looking at digital transformation, which is such a key part, it is impacting every industry around the world. And, you know, there's this whole view towards ensuring that all business models are data and service driven. These are big shifts. These are big changes. These are megatrends, which provide opportunity for businesses, which are willing to see through all of this noise that we are in at the moment, see through all of the storms that we are traveling through and to have clear goals towards how to take advantage of these opportunities, because these are truly there for businesses to grow on. Businesses have to change. This has been the story since the pandemic started. Businesses no longer can continue on the path that they were at. That's the opportunity and that's the silver lining. And that's something that I think provides a lot of momentum, a lot of growth where we entered the pandemic on a relatively strong note. We've come out of the pandemic, households and businesses on a relatively strong note, whether it's in terms of savings, whether it's in terms of businesses not having spent for so many years for so many years for the last couple of years. I think all of that provides the chance that investment can be put to good use. There are concerns around economic policies being introduced by some economies around the world, but I think at the broader level, I mean, even if you look into ESG and sustainability, I mean, that's come at the forefront of every industry. Businesses as well as boards are now getting involved to try and shape our future. And, you know, the millennials, the younger population, are forcing us to take a look at our business models, to pay attention to the mark that we are going to leave on this planet. So I think that in itself is a huge opportunity that we need to start taking advantage of, and that is happening as we speak. Thanks, Reena. Sancy, reasons for optimism from where you're sitting in Singapore? Yeah, no, I think, you know, in every crisis, there's always opportunities like this. And I think, as Reema has said, I think that the key is to kind of look at, you know, some of the key issues that emerge and kind of coalesce and galvanize all of us to focus on with the sustainability, health care and digital transformation. I think if I may, I can add a little bit more to the second part of the question of it as well, because I think it's related to this because from a business perspective, if you think about this crisis, it is also an opportunity because you know that if you can emerge from this better than others, then you're going to be even stronger than before. And we have seen, you know, the previous downturn, previous crisis have seen this happening as well. And so what is it that needs to be done to whether it's on better? In my view, a humble opinion is probably a mix of two things, at least. One is to achieve a better kind of risk diversification. I think in a more volatile and uncertain world, that's the key thing. And this can include, you know, diversification in terms of geography, whether it's where the market is selling to your supply chain. It also could mean diversification in terms of business sector. But all of this is not free. Of course, there are costs of diversification. It may come at a cost of efficiency. And so you need to kind of adapt that through time. There will be times when it's better to focus on your core business, your core markets and just go there and be very focused. And there will be times where you really need to kind of diversify and kind of managing risk better. And that mix between the two side is going to keep changing and it's different for everyone. I think for businesses, it's about finding that sweet spot and adjust this through time. So adaptability becomes really important. So you need to be diversifying your risk, managing your risk well. You need to be adaptable, very highly adaptable and agile over time. And if you can do that both, you're going to get opportunities where you can be much better than other people. Thanks, Santy. And Dai, just the last word on optimism to you. Yeah, I mean, I think there's a lot of things to be optimistic about. In the very big global level, there's a transition, as I said, to sustainable energy that creates many opportunities for companies and importantly for governments, but we must take that. I think we're also reaching a technology inflection point as well. I think that while we are moving toward it would appear a more bipolar world around technology that can create an opportunity for a competitive striving to be to be better and can create many opportunities around that. So I'm quite optimistic about that as well. I think one other thing is that I think there is going to be less central bank providing unlimited liquidity that was seen really over the last 10 or 15 years. And that is quite a good thing. It was maybe Darwinian and it will be leading to the survival of the fittest companies that are in the best position will do the best, which leads me to the last point, which is around how do companies weather this? And it's going to be about sustainability. It's going to be about resilience. It's going to be making sure that they are they are flexible, that they have improved their supply change, not necessarily bringing things back on shore, but diverse supplying supply chains, particularly for key components, making their business model more secure, more resilient to get through the downturn, which unfortunately we're going to be coming into. But to benefit once that upturn comes again and things are looking more normal, I think it's great potential there for companies and importantly for governments as well to reposition. Thanks, Guy. Sanya, just turning to you to bring our discussion of this global economic outlook to a close, it's probably one of the bloomier and darker reports that you've and your team have produced in the in the last few years. But are there signs of optimism that you draw from it and other conclusions that we perhaps should should pay attention? Sure. Thank you, first of all, to all of the chief economists here that that have given us their viewpoints from from different parts of the world. I think when we look at the survey as a whole and everything that's come out, there's probably two things that we really need to focus on. One, vulnerability has increased for large parts of the global population, both in developed economies and in developing economies. And I think that's where some of these numbers and some of this bloomier outlook has to get translated into the real human impact that is expected. And that's where the 90 percent are expecting that real wages are going to fall in developing economies, 80 percent in developed economies. So we are talking about millions of people being impacted as that cost of living begins to bite. And for some, that's going to be manageable. But for many, it is not going to be manageable. The second element that I think we have to look for is that the trend towards the globalization that we were seeing also a few months earlier. And that was really sort of peak of the conversation. Once the war in Ukraine began, I think there are still signs that this is going to continue and is going to be one of those profound mega trends for some time to come. So when we ask companies what they're expecting to do and how they're going to adapt to some of these changes, most are expecting to diversify their supply chains, localize their supply chains, and many are expecting to adapt to the new geopolitical fault lines. So geopolitics and geoeconomics is here to stay for some time. At the same time, while there are some silver linings and to the point that everybody has made here, there aren't, unfortunately, silver bullets. It is going to take concerted proactive effort from a number of different stakeholders, so one towards the green transition. And we have a very mixed picture from the chief economist. About half are not quite certain that the push towards the green transition will continue in the same way that we were seeing some months ago. And I think that is definitely something to watch out for in the midst of this energy crisis. The second element is that shift towards reskilling to better prepare the labor market for the future of work. Again, there was a very concerted effort around this. And this was at a peak in the midst of the pandemic. This has to be pushed through very proactively by governments if they want their labor markets to be prepared to the point on safety nets. The cost of safety nets can go down again using some of these new technologies. So when it's at tech, health tech, micro insurance, a lot can be done. But again, it is going to take effort from governments and from the private sector as well to go into some of these new and emerging areas. So I agree that there are silver linings, but I think it's going to take coordination and multi-stakeholder cooperation. Sanyu, thank you. Thanks to all of our economists for joining to guide Santy and Rima. Sanyu, my thanks to you. If you'd like to read that report, just search for Global Economic Outlook at World Economic Forum and you'll find it online. And I hope you've enjoyed hearing these opinions today. Thanks for joining us from Geneva. Have a good day.