Centre for the New Economy and Society
Chief Economists
Outlook
May 2023 Chief Economists Outlook
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2Chief Economists Outlook
Chief Economists Outlook
May 2023
This quarterly briefing builds on the latest policy
development research as well as consultations
and surveys with leading chief economists from
both the public and private sectors, organized
by the World Economic Forum’s Centre for the
New Economy and Society.
It aims to summarize the emerging contours
of the current economic environment and
identify priorities for further action by policy-
makers and business leaders in response to the
compounding shocks to the global economy
from geoeconomic and geopolitical events.
The survey featured in this briefing was
conducted in March-April 2023.
3 Chief Economists Outlook
Contents
Executive summary __________________________________________________________ 5
1. The weight of uncertainty __________________________________________________ 7
Broad-based growth remains elusive __________________________________________ 7
Prices continue to cause pain ________________________________________________ 9
2. Financial sector tremors __________________________________________________ 12
Bank collapses dent confidence _____________________________________________ 12
Interest rates in the spotlight ________________________________________________ 14
3. The changing face of globalization _________________________________________ 17
The return of industrial policy _______________________________________________ 17
The reshaping of global supply chains ________________________________________ 19
References _________________________________________________________________22
Contributors ________________________________________________________________26
Acknowledgements_________________________________________________________ 27
Cover: Unsplash
4 Chief Economists Outlook
Executive summary
The May 2023 Chief Economists Outlook country’s growth prospects are clouded
launches amid continuing uncertainty for by heightened uncertainty around financial
policy-makers, businesses and households stability and the pace and extent of
as persistent headwinds buffet the global monetary tightening.
economy. While there are signs of nascent
optimism, the banking disruption of The chief economists expect equally
March 2023 has caused tremors in the divergent regional inflation outlooks for
global outlook.2023. Headline rates have begun to ease,
but core inflation is stickier than anticipated
Moreover, the marked dispersion of and shows signs of picking up. The
responses to some questions in the latest pressure on many households remains
Chief Economists Survey suggests that acute, and more than three-quarters of
there is little consensus about how torespondents expect the cost of living to
interpret and weigh the latest economicstay at crisis levels in numerous countries
data and developments. The expectationsthroughout 2023.
around a potential global recession in 2023
are a case in point: 45% of chief economists The recent banking instability has
say a recession is likely, but the samecomplicated efforts to deal with runaway
proportion considers it unlikely.prices. Almost 80% of chief economists
think central banks now face a trade-off
Regionally, there has been a notable between managing inflation and maintaining
strengthening of expectations for mostfinancial sector stability. A similar proportion
economies since the January 2023expect central banks to struggle to reach
Chief Economists Outlook. Perhapstheir inflation target.
unsurprisingly, the most buoyant economic
activity is expected in Asia, with China’s Although the chief economists are broadly
reopening projected to bolster activitysanguine about the systemic implications
across the continent. For China itself,of the recent financial disruption – 69%
chief economists are near unanimous incharacterize it as isolated episodes rather
expecting a significant rebound this year. than signs of systemic vulnerability – they
point to potentially damaging knock-on
At the other end of the spectrum, 75% of effects. These include a squeeze on
chief economists still expect weak or very the flow of credit to businesses and the
weak growth this year in Europe, whileprospect of significant disruption in property
for the US, views are divergent as themarkets in particular.
5