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Global recession unlikely, economist tells Jakarta audience

With inflation pressure appearing to relent somewhat across the world, some economists are more optimistic about 2023 being a year of global recovery, with Indonesia’s strong fiscal position giving the country an edge.

Aditya Hadi (The Jakarta Post)
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Jakarta
Thu, February 2, 2023

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Global recession unlikely, economist tells Jakarta audience American economists Jeffrey A. Frankel (top left, professor at Harvard University's Kennedy School of Government) and Maurice Obstfeld (bottom left, professor of economics at the University of California, Berkeley) are connected online with Investcorp Co-CEO Hazem Ben-Gacem (bottom center) and BlackRock Ltd director Lee Dong Chan (bottom right) in a panel discussion moderated by Bank Mandiri risk management director Ahmad Siddik Badruddin at the Mandiri Investment Forum in Jakarta on Feb. 1, 2023. (YouTube/screenshot/Mandiri Investment Forum)

W

ith inflation pressure appearing to relent somewhat across the world, some economists are more optimistic about 2023 being a year of global recovery. 

Jeffrey A. Frankel, a macroeconomist who is also professor at Harvard University's Kennedy School, said a recession was unlikely at this point, with a less than 50 percent probability.

Speaking at the Mandiri Investment Forum held in Jakarta on Wednesday, he pointed to China's reopening as a major factor behind the improved forecast for global economic growth.

In the same panel discussion, Lee Dong Chan, a director at United States investment firm Blackrock shared a similar view, arguing that the probability of a full-blown global recession was "lower than expected a few months ago".

On Tuesday, the IMF upped its forecast for global GDP growth for this year to 2.9 percent. That is higher than the IMF’s projection of 1.4 percent for the US economy and 1.2 percent for advanced economies overall.

Frankel noted that the US figure did not sound strong. "But we wanted a soft landing [for the US economy]; that's what we have in the forecast here," he said.

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However, Maurice Obstfeld, a former chief economist of the International Monetary Fund, said the world could not afford to lower its guard, explaining that there was no guarantee for an economic recovery this year.

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