Editor's note: The World Economic Forum (WEF) Annual Meeting 2022 is being held in Davos, Switzerland. According to the IMF, global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023, or 0.8 and 0.2 points lower than projected in January. The world economy stagnates and even enters recession. Erik Berglof, a chief economist of the Asian Infrastructure Investment Bank, shares his views on this issue. The opinions expressed in the video are his own and not necessarily the views of CGTN.

CGTN: U.S. inflation hit a new 40-year high of 8.5 percent, while EU inflation stands at 8.1 percent. How will such high inflation in these major economies affect the world?

Erik Berglof: I think there are several effects. One is that this will mean lower consumption in these countries, which, in turn, will mean that they will buy less things from the rest of the world, and that will not help global growth, of course. The other thing is that in response to this inflation, they will increase interest rates; so, they will have to try to reduce in inflation and slow down the growth and inflation by raising interest rates.

That will probably lead to disruptions in many emerging developing economies as capital will go to where the interest rates are high. And for many economies, I think there have been a lot of improvements in what we call macro frameworks that try to protect and stabilize economies. But this will be a very severe test for these frameworks.

On top of that, I would say that with the increasing inflation, not only in those rich countries, there will be increasing inflation in other parts of the world. And we know that inflation, when it hits things like food prices and fuel, can be very disruptive also for the political situation. So, you can have political instability in many parts of the world as a result of high inflation.

CGTN: What strategic priorities should countries undertake to help the global economy recover?

Berglof: I think the first thing, which has been true for some time now, the rich countries need to make sure that the vaccines are available for the entire world, and also that their efforts to help make sure that these are also deployed so that they also reach the people that could be infected. That's a very important priority. A second priority is to try to bring down inflation because this is something that will be very impactful for many countries in the world.

There is a unique opportunity now to try to address the need for renewables for green growth. That will be a very important part to address what we call inflation, this combination of high inflation and potentially high unemployment. We should say that so far unemployment has stayed very low, and there is even shortage, in many areas, of qualified workers. The risk is that we will have indeed much lower growth rates, possibly a recession, and that will bring up unemployment.

So, all these things need to be put in place - the medical emergency, the economic situation, and also thinking long-term strategically about green growth.

CGTN: How can the World Economic Forum gather international forces to achieve global economic recovery in the post-pandemic era?

Berglof: It comes against the backdrop of low expectations in terms of growth, concerns about inflation. There is a need, and this is where we need the coordination now to address the remaining vaccination issues. I think there is a long-term need to rekindle the green growth ambition. Again, it requires a lot of coordination.

A lot of good proposals have been put on the table. We are not talking about very large amounts, but this would come at a time when anything that can be done to stimulate this targeted growth would be very welcome. So, these are the kind of things that will be discussed and should be discussed at the World Economic Forum in Davos.

Interviewer: Li Yunlong

Managing editor: Li Yunlong

Video editing: Liu Shasha

Executive producers: Bi Jianlu, Wang Xinyan, Zhang Peijin 

Supervisor: Mei Yan

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