Over 500 leaders from government, business and civil society convened at the World Economic Forum (WEF) Jobs Reset Summit 2021 this month to set out a new agenda for growth, jobs, skills and equity, and lay the foundations of a new economy, one that provides opportunities for all.
Last year the pandemic cost the global workforce an equivalent of 255 million full-time jobs, an estimated $3.7 trillion in wages and 4.4% of global GDP, with a devastating impact on lives and livelihoods. The outlook for economic growth and the global recovery of jobs is predicted to improve, but it is far from certain.
Here are the key takeaways from the summit.
Understanding the Global Economic Outlook
The global economic outlook has a long road ahead, chief economists said during the Jobs Reset Summit this week. Panelists at the forum, in addition to respondents to the Chief Economists Survey, predicted a growth rate of around 6% for 2021. The global GDP should return to pre-pandemic levels by 2022, experts predicted, but the recovery will vary dramatically between emerging economies and advanced economies.
Predictions of a year-on-year improvement in growth across the board were tempered by warnings of longer-term concerns in terms of how the recovery will play out globally.
“The key question is how well-equipped the developing world is to deal with a faster recovery trajectory of the developed world,” said Razia Khan, chief economist Africa and Middle East at Standard Chartered Bank.
Rising inflation is another cause for concern, and respondents to the Chief Economists Survey expect monetary authorities to hold steady on prioritizing price stability, implying an increase in rates in the not too distant future as inflation is starting to pick up.
Questions were raised over the prospects of a cliff edge in Q3. Ludovic Subran, chief economist at Allianz SE, said: “For policymakers, the fall could be a time when purchasing power and wage policy is going to be flashing red lights for social cohesion and unrest.”
The withdrawal of stimulus and support packages in the US and UK could see companies that retained staff because of those support packages ultimately let those staff go, causing a spike in unemployment and longer-term scarring for labour markets. Khan is more optimistic.
“Should we expect a cliff edge?” Khan said. “No, policy is not going to allow that to happen. The real question, is what are the unintended consequences for everyone else?”
According to Nikhil Madgavkar, chief risk officer at Mahindra Group, the biggest uncertainty would be around the health, social, climate, economic and digital spheres.
“Companies that don’t listen to stakeholders and address today’s social, health and environmental challenges will fall aside,” he said.