President Yitzhak Herzog at the previous economic forum in Davos.
There are concerns, but alongside them is also cautious optimism (Photo: Reuters)
Roast Greenberg
Judging by the summary of the last panel held at the annual meeting of the World Economic Forum in Davos at the end of last January - there is room for optimism, if you decide to look at the half-full economic glass.
Although recession and slowdown still appear in the global economic discourse, alongside them are also the assessments of all the leading international economists for growth.
The latter is indeed expected to be lower than in recent decades - but as long as the trend is upward, the damage to the global economy hurts less.
Kristalina Georgieva, Director General of the International Monetary Fund (IMF), stated that the forecast for global growth has improved mainly due to the growth potential of those who were the catalyst for the economic devil dance - China, the second largest economy in the world by GDP ( gross domestic product) of about 18.3 trillion dollars.
Ukrainian President Volodymyr Zelensky speaks to the participants of the Davos conference in Switzerland (Reuters)
War and Peace
Although optimism fills the lower half of the glass, the other part is filled with risks, such as a possible escalation in the Russia-Ukraine war, which could also lead to a transatlantic trade war.
UN economists, therefore, estimate that global growth will drop to 1.9% in 2023 compared to 3% last year, and this is due to intersecting crises such as the Ukraine war, the tide of inflation, the tightening of debt and a climate emergency. The World Bank's forecast is even more pessimistic, and lowers the The growth percentage to 1.7%.
About two-thirds of the economists who participated in the meeting estimate that there is a likelihood of the global economy entering a recession, while another 18% estimate this as a 'highly likely' scenario, unless there is a reduction in the cost of living and a solution to the energy crises. The
absence of a recession, with However, it does not solve the problem of international economies, since a slowdown is an injury no less significant than it.
Although the slowdown is seen as lower on the scale of economic "danger" than a recession, when it is experienced by the two largest economies in the world (the USA and China), which themselves constitute about 43% of global GDP, all the economies that feed on them are affected.
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Will the Chinese economy also grow again at the rates we knew before the epidemic? (Photo: Reuters)
Partly cloudy
"A slowdown in exports from key economies in Asia," the forum's economists estimate, "raises the fear of a further slowdown in the global economy. Japan's export growth slowed sharply in December; shipments to China fell for the first time in 7 months with a drop in sales of cars, their parts and chip-making machines; and South Korea's economy contracted for the first time in 2.5 years after exports of its high-tech products fell due to the weak global economy and the recent slowdown in China."
It should be noted that the five largest economies make up about half of the world's GDP, and all ten in the table attached to this article make up about two-thirds of it, with the additional 185 countries making up the remaining third of the world's GDP.
That is why slowdowns in the major economies feel like recessions for the rest of the economies.
Additional risks anticipated during the meeting of the forum's economists were the transfer of supply chains within a group of countries with common values, which would lead to inefficiency and duplication, and therefore to the continuation of inflation.
If that's not enough - the two largest economies in the world are facing problems related to debt.
The US may face a fiscal crisis in the coming months after the government reaches a debt ceiling of $31.4 trillion.
Chairman of the Federal Reserve, Jerome Powell. If the national debt is not settled, it will be necessary to continue to raise interest rates (Photo: GettyImages, Drew Angerer)
The threatening debt
The US Treasury has begun using what it described as "extraordinary measures" in cash management to try to avoid a debt default by June 5.
The US debt ceiling is a legal limit on how much the federal government can borrow.
It was set by Congress and expanded to its current level in December 2021 following demands from the Democratic Party.
This limit is now being damaged following a conflict between the US House of Representatives, which is controlled by the Republicans, and US President Joe Biden, who leads the Democrats, on the issue of removing the debt ceiling again.
A Bloomberg report indicates that most analysts in the US estimate that a deal will be reached between the parties as part of which the debt ceiling will be raised.
We note that this has increased 45 times in the last 40 years.
In the meantime, those who will pay the price will be the investors in the stock markets, who will experience volatility despite the recent increases experienced on Wall Street.
Given that the credit rating of the United States is lowered, interest rates will rise even more, thus putting more burden on the financing costs of households and businesses, which in turn will reduce consumption and jobs, respectively.
Minister of Finance in Salala Smotrich.
With a bit of luck, the trend in the Middle East will change precisely on his watch (Photo: Avi Rokah)
Meanwhile in the Middle East
As Israelis, however, we have a lot of room for optimism, as about 70% of the World Economic Forum's economists estimate that the Middle East will experience growth to strong growth in 2023, lower only than South Asia, where 85% of economists estimated growth to strong growth.
The US and Europe are expected to pay the highest economic price, with only 9% of economists estimating that the US will experience growth, while 91% estimate that it will experience weak (82%) or very weak (9%) growth, alongside Europe, whose estimates are that it will experience growth Very weak (68%) or weak (32%).
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