Politicaland business leaders gathering for the World Economic Forum (WEF) meet againsta backdrop of inflation at its highest level in a generation in major economiesincluding the United States, Britain and Europe.
These pricerises have undermined consumer confidence and shaken the world"s financialmarkets, prompting central banks including the US Federal Reserve to raiseinterest rates.
Meanwhile,the repercussions on oil and food markets of Russia"s invasion of Ukraine inFebruary - which Moscow describes as a "special military operation" -and COVID-19 lockdowns in China with no clear end have compounded the gloom.
"Wehave at least four crises, which are interwoven. We have high inflation ... wehave an energy crisis... we have food poverty, and we have a climate crisis.And we can"t solve the problems if we concentrate on only one of thecrises," German Vice Chancellor Robert Habeck said.
"But ifnone of the problems are solved, I"m really afraid we"re running into a globalrecession with tremendous effect .. on global stability," Habeck saidduring a WEF panel discussion.
TheInternational Monetary Fund (IMF) last month cut its global growth outlook forthe second time this year, citing the war in Ukraine and singling out inflationas a "clear and present danger" for many countries.
TIPPINGPOINT
EuropeanCentral Bank (ECB) President Christine Lagarde, due to speak in Davos onTuesday, has warned that growth and inflation are on opposing paths, asmounting price pressures curb economic activity and devastate householdpurchasing power.
"TheRussia-Ukraine war may well prove to be a tipping point forhyper-globalisation," she said in a blog post on Monday.
"Thatcould lead to supply chains becoming less efficient for a while and, during thetransition, create more persistent cost pressures for the economy,"Lagarde added.
Still, sheessentially promised rate hikes in both July and September to put a brake oninflation, even if rising borrowing costs are bound to weigh on growth.
While theeconomic drag from the Ukraine crisis is being most keenly felt in Europe, itis the US economy that is experiencing the greatest price pressures.
The ConsumerPrice Index shot from near zero two years ago to a 40-year high of 8.5 percentin March. The Fed responded earlier this month with its largest rate hike in 22years, and Chair Jerome Powell has signalled increases of a similar magnitude -half a percentage point - at its next two meetings at least.
The higherrates and expectations for more, though, have yet to weaken consumer spendingand a red-hot US job market.
"We"renot seeing it materialize in our business yet," Marriott International IncChief Executive Anthony Capuano said of the threat of recession, adding:"There continues to be pent-up demand."
Key emergingmarkets, including China, are still expected to see growth this year, even ifat a slower pace than previously estimated.
MarcosTroyjo, president of the New Development Bank set up by Brazil, Russia, India,China and South Africa, said his bank still expects "robust growth"this year in China, India and Brazil.
