The threat of recession is real, especially in developing and emerging countries, but in India, things look better, said Borge Brende, President of the World Economic Forum.
"It is real, and especially in developing countries and in emerging economies, we are seeing that they are faced with big challenges. I think for India, it looks better as we do think the country will grow 8 percent this year. But there are other countries that are really struggling," he said during an interview with CNBC-TV18 on the sidelines of the ongoing World Economic Forum Annual Meeting 2022 in Davos. The meeting will bring together nearly 2,500 global leaders to address current challenges during this time of heightened polarization.
Talking about the interest rate hike Brende said one should have raised it a little bit earlier to avoid the spike that we are seeing now. "At the same time, we are now seeing a slowing of the global economy, that will also create less demand for oil, gas, and other materials. So maybe within a couple of months, we will see less inflationary pressure. If you know, increase the interest too much too fast, then we could easily move into a recession. So we have to balance this very carefully. But it is a very tricky balancing act, it is like squaring a circle," he said.
World Economic Forum 2022: Sean De Cleene talks about food crisis, security and other global challenges
Brende said developing countries are very vulnerable. “Because we see that capital is not being invested in developing countries and we are seeing they have huge challenges with the soaring food prices. Also, prices of fertilisers have doubled so they are in a weak situation. For the first time, in 30 years, we do see that extreme poverty is increasing this year," he said.
On India he is very optimistic. He said in India there are reforms being undertaken, that will also create additional growth in the years to come. "There is a strong industrial base, but also, India has huge opportunities when it comes to digital transformation. But has to invest more in the new technologies like China is doing with AI, but also with big data," he said.
Brende said he believes that India will more and more become one of the big and important global powers and is playing also an important role in like checks and balances in the world.
Watch accompanying video for more