DAVOS, Switzerland (AP) – Rising inflation. Russia’s war in Ukraine. Squeezed supply chains. The threat of food insecurity around the world. The ongoing pandemic of COVID-19.
The risks to the global economy are many, leading to an increasingly bleak picture of the coming months for corporate leaders, government officials and other VIPs at the annual meeting of the World Economic Forum in the Swiss resort town of Davos. The war is a thread stopping the global economic recovery from the pandemic, economists say.
The managing director of the International Monetary Fund tried to dispel the darkness this week, saying the global recession was not on the map, but “that doesn’t mean it’s out of the question.”
Kristalina Georgieva noted that the IMF expects economic growth of 3.6% in 2022, which is “a long way to the global recession.” But she acknowledged that it would be a “difficult year” and one of the big problems was rising food prices, partly fueled by Russia’s war.
“Concerns about access to food at a reasonable price worldwide are hitting the roof,” she said.
The brewing crisis – especially for countries in Africa, the Middle East and Asia that rely on affordable wheat, barley and sunflower oil, which Russia is blocking in the ports of major Ukrainian producer – has been a key issue in Davos. The European Union and the United States have accused Russia of using food supplies as a weapon.
“Russia is looting Ukrainian grain from occupied territories, burning Ukrainian storage facilities in other territories, destroying other Ukrainian agricultural infrastructure and equipment,” European Commission Executive Vice President Valdis Dombrovskis told a trade group on Wednesday. “It is clear that there is deliberate action by Russia to create these global food security problems.
If Ukraine’s supplies remain out of the market, the world could face food shortages in the next 10 to 12 months and “it will be hell on earth,” World Food Program Executive Director David Beasley told the Associated Press in Davos.
Elites meet each year to discuss ways to help save the world, although it is unclear how concrete the meeting is. Panels and messages focused on Wednesday on the future of Europe and the internet, helping poorer countries with cheap medicine and climate change, including expanding public-private partnerships aimed at driving green technologies through corporate investment.
US climate envoy John Kerry, Bill Gates and Salesforce and Google officials said the coalition of the first movers had grown from 35 to 55. Sweden, India, Japan, Denmark, the United Kingdom and other countries also joined.
In Davos, representatives of economic and central banks discussed the effects of relocating the abstract policy levers they have, while company bosses outlined concerns about business prospects.
“As we run our business, we believe the adjustment is already under way,” in the global economy, said Pat Gelsinger, chief executive of chipmaker Intel, on the sidelines of the meeting.
Gelsinger said the semiconductor industry is still struggling with supply chain problems, including delays in the delivery of state-of-the-art equipment used to make computer chips.
The global shortage of chips, used in everything from cars to kitchen appliances, erupted last year as demand recovered from the pandemic.
Gelsinger said Intel is better positioned than its competitors to deal with supply chain problems because it has more control over supply.
“But like everyone else, we have to deal with the same challenges economically,” he told a news conference.
Gelsinger said he did not expect the semiconductor industry to allow supply chain breaches by 2024.
Problems with Volkswagen’s supply chain are alleviated, but it handles a huge number of orders. The German carmaker sees “clear improvement over the summer” in the supply of microchips it needs, said President Herbert Dies.
VW-owned Audi has “the highest level of orders at the moment”, but customers face waiting periods of a year or more, board member Hildegard Wortmann told a news briefing.
The aviation industry, destroyed during the pandemic as restrictions forced airlines to operate ground flights and killed travel demand, is recovering strongly, said Hassan El Huri, chief executive of National Aviation Services.
The Kuwaiti-based company provides airline services such as passenger check-in and transfer staff to and from aircraft, luggage loading and unloading and air cargo handling. It merges with a rival from the United Kingdom to become the world’s largest aviation service company.
“Almost every airline I talk to is reporting a huge recovery, especially for this summer and especially for leisure travel,” El Huri said in an interview.
He predicts that the airline will return to pre-pandemic levels at the end of this year or the middle of next year, earlier than the IATA group’s 2025 forecast.
However, the industry is overshadowed by losses of $ 200 billion accumulated during the pandemic. The other big problem is the spike in oil prices fueled by the Russian war, which will force airlines to pick up airline tickets and potentially reduce demand for travel.
Fewer air passengers means that El Houry’s company operates fewer flights.
“Our biggest customers are the airlines. And when airlines are experiencing stress, guess what? “They will put that pressure on us,” El Huri said.
In addition to rising fuel, food and other commodity costs, which are causing a cost-of-living crisis, central banks are raising interest rates to deal with high inflation, and China is seeing a slowdown amid the COVID-19 blockade, Gita Gopinat said. the first IMF deputy managing director.
“So we have a bunch of shocks hitting the world,” she told a panel on global growth on Wednesday.
This is particularly acute in Europe, which has revealed the war in Ukraine, European Central Bank President Christine Lagarde said on Wednesday.
“Europe is 20% more open to the vulnerabilities of global value chains than any other market in the world. So it’s not surprising that the breakdown and bottlenecks of global value chains affect European companies and us more than others, “she said.
Others highlighted the uncertainty that is shaking financial markets and complicating investment decisions for businesses.
Adena Friedman, president of NASDAQ, told a panel on the US economic outlook on Monday that “selling is much easier than buying” for investors who can’t see where things are going.
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Associated Press reporters Jamie Keaton and Peter Prengaman of Davos and Paul Wiseman in Washington.
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