Survey presents how to return to pre-COVID economyJune 2, 2021
The Chief Economists Survey has presented insights and measures how to return to pre-COVID economy and the impact of various threats.
Soaring stock markets and rising commodity prices give the impression that the fortunes of the global economy are looking up. And yet some countries are experiencing dramatic new waves of the virus, millions of workers have dropped out of the global labor force, and many risk factors could delay or derail the rebound.
The challenge remains: How can leaders shift from emergency support to more targeted spending while overcoming domestic polarization and global divergences?
The latest survey results from the World Economic Forum’s Chief Economists community offer insights into navigating this transition.
Here are some of the takeaways:
Survey respondents expect monetary authorities to hold steady on prioritizing price stability, implying increases in rates soon are becoming more likely as inflation is starting to pick up.
A new direction is expected on the fiscal side, where a global minimum corporate tax rate has become more likely since the US’s proposal in April.
Regarding transition risks, respondents see the largest risk of scarring from a delayed wave of bankruptcies, followed by labor market scarring.
Another danger that could derail the recovery and future growth are large-scale cyberattacks, including those performed by state actors, followed by technology and trade tensions.
The coming months will be critical for putting the climate transition on the right track.
A significant number of survey respondents believe that 2050 is not ambitious enough for net-zero targets. Instead, they are looking for such targets before 2035.
There is further a consensus that a carbon tax is among the most effective policy instruments to reach targets for carbon neutrality.
The global economy, according to the survey, is at a critical juncture of growing divides among and within countries. While there is a need for efforts to reduce divergences in one place, it will not exacerbate the situation elsewhere.
There has to be a global approach to the green transition and supporting investments in green technology and skills including lower productivity firms and disadvantaged workers. This approach is necessary to counter the forces that drive present K-shaped recovery.
K-shaped recovery occurs when, after a recession, the economy recovers at different phase, times, or magnitudes. This is in contrast to uniform recovery across sectors, groups of people, or industries.
The World Economic Forum released the June Edition of the Chief Economists Outlook amid recovery momentum but in an uncertain environment of diverse directions. It explores important forces and developments and accompanying risks that could derail the recovery. (amm/ PR)