Most corporate leaders worldwide now expect an economic downturn by the end of next year if not sooner, as rising energy prices and the war in Ukraine increases uncertainty, according to a survey released Friday.
The survey showed “more than 60% of CEOs and top executives globally say they expect a recession in their primary region of operations within the next 12 to 18 months,” The Conference Board said.
And 15% of the 750 executives, including nearly 450 CEOs, in Asia, Europe and North America, “say their region is already in recession,” the survey showed.
Concerns about the chances of a recession – usually defined as two quarters of economic contraction – have risen since the Federal Reserve on Wednesday announced the biggest interest rate hike in nearly 30 years, and other central bankers followed suit including the Bank of England, as policymakers struggle to contain red-hot inflation.
The Russian invasion of Ukraine “is proving to be the ultimate ‘gray swan’ event” – one considered highly unlikely – which is “creating extraordinary volatility and uncertainty with global ramifications for national economies,” according to the survey, conducted last month.
“Historically high energy prices, renewed supply chain disruptions, heightened geopolitics risks, and eroding consumer confidence are all putting downward pressure on global growth,” said Dana Peterson, chief economist at The Conference Board.
And “That’s on top of lockdowns in China and the cascading ripple effects of the war in Ukraine,” added Peterson. “These disruptions, along with restrictive monetary and fiscal policy decisions, are fuelling recession expectations.”
The institution still expects solid global growth of 2.9% in 2022 and 2.3% in 2023, but acknowledged that “one extreme event, or even a combination of several smaller unfavourable events” could derail that, sparking a downturn.
And a prolonged period of “stagflation” with slow growth and high inflation “could result in a longer or deeper recession.”