DAVOS, Switzerland (AP) — Rising inflation. Russia’s war in Ukraine. Compressed supply chains. The threat of food insecurity in the world. The ongoing COVID-19 pandemic.
Risks to the global economy abound, leading to an increasingly bleak outlook for the months ahead for business leaders, government officials and other figures at the annual meeting of the World Economic Forum in Davos, Switzerland . The war has been a common thread, delaying global economic recovery from the pandemic, economists say.
The managing director of the International Monetary Fund sought to dispel the gloom this week, saying a global recession is not in the cards, but “that doesn’t mean it’s out of the question”.
Kristalina Georgieva noted that the IMF expects economic growth of 3.6% for 2022, which is “a long road to global recession”. But she acknowledged it’s going to be a “difficult year” and one of the big issues is soaring food prices, partly fueled by the war in Russia.
“Anxiety around access to reasonably priced food around the world is reaching fever pitch,” she said.
The beer crisis – especially for countries in Africa, the Middle East and Asia that depend on the affordable wheat, barley and sunflower oil that Russia has blocked in the ports of the main producer Ukraine – was a key topic at Davos. The European Union and the United States have accused Russia of using the food supply as a weapon.
“Russia is looting Ukrainian grain in the occupied territories, it is burning Ukrainian food warehouses in other territories, it is destroying other Ukrainian agricultural infrastructure and equipment,” European Commission Executive Vice-President Valdis said on Wednesday. Dombrovskis, during a trade panel. deliberate action by Russia to create these global food security problems.
If Ukraine’s supplies stay off the market, the world could face a food availability problem in the next 10-12 months, and ‘it will be hell on earth’, says Food Program executive director world, David Beasley, at the Associated Press in Davos.
The elites meet every year to discuss ways to help save the world, though it’s unclear how many concrete actions the meeting produces. Panels and announcements focused Wednesday on the future of Europe and the internet, helping poorer countries with low-cost medicines and climate change, including expanding a public partnership- to propel green technologies through business investment.
US climate envoy John Kerry – joined by Bill Gates and heads of Salesforce and Google – announced that the First Movers Coalition has grown from 35 companies to 55. Sweden, India, Japan, Denmark, the United Kingdom and other countries have also joined.
In Davos, economic and central bank officials debated the effects of shifting the abstract policy levers at their disposal, while business leaders raised concerns about the business outlook.
“As we run our business, we believe a correction is now well underway” in the global economy, said Pat Gelsinger, CEO of chipmaker Intel, on the sidelines of the meeting.
Gelsinger said the semiconductor industry is still grappling with supply chain issues, including a slowdown in shipments of advanced equipment used to manufacture computer chips.
A global shortage of chips, used in everything from cars to kitchen appliances, erupted last year as demand rebounded from the pandemic.
Gelsinger said Intel is in a better position than rivals to handle supply chain issues because it has more control over sourcing.
“But like everyone else, we face the same economic challenges,” he said during a roundtable with the press.
Gelsinger said he doesn’t expect the semiconductor industry to fix supply chain issues until 2024.
The aviation industry, decimated during the pandemic as restrictions forced airlines to ground flights and killed travel demand, is rebounding strongly, said Hassan El Houry, CEO of National Aviation Services.
The Kuwait-based company provides services to airlines, such as staff to check in passengers and shuttle to and from planes, load and unload baggage, and handle air cargo. It merges with a British rival to become the largest aviation services company in the world.
“Almost every airline I speak with is reporting a huge rebound, especially for this summer and especially for leisure travel,” El Houry said in an interview.
He predicted the airline industry would return to pre-pandemic levels by the end of this year or the middle of next year, sooner than the IATA airline industry group’s forecast for 2025. .
However, the industry is overshadowed by $200 billion in losses accumulated during the pandemic. The other big issue is Russia’s war-fueled oil price spike, which will force airlines to raise airfares — and potentially reduce demand for travel.
Fewer air passengers means that El Houry’s company serves fewer flights.
“Our biggest customers are the airlines. And when the airlines feel the pressure, guess what? They’re going to pass that pressure on to us,” El Houry said.
Along with rising fuel, food and other commodity costs causing a cost of living crisis, central banks are raising interest rates to combat high inflation and China is experiencing a slowdown amid COVID-19 lockdowns, IMF premier Gita Gopinath said. Deputy General Director.
“So we have a confluence of shocks hitting the world,” she said during a panel on global growth on Wednesday.
It is particularly acute in Europe, which the war in Ukraine has revealed, European Central Bank President Christine Lagarde said on Wednesday.
“Europe is 20% more open to vulnerabilities in global value chains than any other market in the world. It is therefore not surprising that the collapse and bottlenecks of global value chains affect European companies and us more than others,” she said during a panel titled Unity. Europe in a messy world?
Others pointed to the uncertainty rocking financial markets and complicating corporate investment decisions.
Adena Friedman, president of the NASDAQ stock exchange, told a U.S. economic outlook panel on Monday that “a sell decision is much easier than a buy decision” for investors who don’t see where. things go.
Associated Press reporters Jamey Keaten and Peter Prengaman in Davos and Paul Wiseman in Washington contributed.
Kelvin Chan, Associated Press