Economists warn of ‘Cold War rhetoric’ as global tensions rise
A quarterly survey from the World Economic Forum found a majority of economists think geopolitics would stoke economic volatility.
Economists have warned of “hardening Cold War rhetoric” as they said they expect the world to continue to tilt towards protectionist policies.
A survey conducted towards the end of last year found that 87% of the 30 respondents thought recent geopolitical developments would stoke economic volatility around the world over the next three years.
Eight in 10 said that they thought it would increase volatility in stock markets.
It comes in a survey run by the World Economic Forum (WEF) as its annual meeting in Davos, Switzerland, kicks off this week.
The survey was carried out in November and December last year, so will take into account Hamas’s attack on Israel, and Israel’s invasion of Gaza, but will miss out the UK and US strikes on Houthi targets in Yemen.
“Amid accelerating divergence, the resilience of the global economy will continue to be tested in the year ahead,” said WEF managing director Saadia Zahidi.
“Though global inflation is easing, growth is stalling, financial conditions remain tight, global tensions are deepening and inequalities are rising – highlighting the urgent need for global co-operation to build momentum for sustainable, inclusive economic growth.”
The survey found that economists’ view of the situation in Europe had worsened significantly since the last quarterly survey was released in September.
The proportion of respondents who expected weak or very weak growth in Europe almost doubled to 77%, the WEF said.
In recent years, the report said, the relationship between the US and China has been characterised by greater rivalry. International trade flows have also been splintered and countries have tilted towards more protectionist policies.
“At the start of 2024, various alliances and simmering global conflicts are buoying concerns that global economic co-operation is faltering,” the report said.
It added: “The gravity of the current momentum is not lost on leaders, however, with many warning of hardening Cold War rhetoric and costly outcomes of fragmentation.”
