Instead of entering a post-pandemic recovery phase, the war in Ukraine has radically altered the geopolitical situation with profound implications for business leaders. These are the main conclusions of the report Perspectives of the Chief Economists of the World Economic Forum. Its objective is to identify priorities for further action by policymakers and business leaders in response to the aggravating shocks to the world economy of the COVID-19 pandemic and geopolitical events.

Interrupted recovery

The OECD had predicted global growth of 4.5%. The forecasts were more moderate for low- and middle-income countries, and growth is expected to remain 5.5% lower than the trend in 2024 (excluding China). The expectation was that general inflation would be in the short term, the upward movement of wages in the medium term, and global fragmentation in the medium and long-term, but ultimately reversible.

Six months later, the picture is significantly different. The majority of respondents in the last survey expect weak growth in the United States, China, Latin America, South Asia, East Asia, sub-Saharan Africa, the Middle East, and North Africa. In Europe, most expect economic activity to be fragile.

The state of the economy

Economies are recovering from the consequences of the war in Ukraine and the new outbreaks of COVID-19 and blockades in the main industrial centers. Beyond the conflict’s immediate humanitarian impact and the pandemic’s ongoing health consequences, this has meant downward revisions of growth prospects and exacerbated inflationary pressures resulting from interruptions in commodities and food supplies. The combined impact of these shocks means a continuous focus on crisis management, a high risk of secondary shocks, and a deviation from investment.

The combined impact of these shocks means a continuous focus on crisis management, a high risk of secondary shocks, and a deviation from investment.

The opinion of the general public in high-income countries is also pessimistic. Only in three countries alone, the United States, Australia, and Canada, more people say that they expect their standard of living to increase instead of decrease.

What kind of leaders do we need now?

The new zeitgeist will require executives with the instincts to deal with changing external forces, the ability to feel new economic opportunities, and the skills to lead and manage in a different era.

We need executives with the instincts to deal with changing external forces, the ability to feel new economic opportunities, and the skills to lead and manage in a different era.

For entrepreneurs, the time has come to identify and develop innovations, not only in the technologies I have already highlighted but also in others. For example, we can expect the creation of new tools to support the activities that flourished during the pandemic, such as working from anywhere, streaming entertainment, and telehealth.

Finally, sectors showing signs of decline, including brick and mortar retail, branch banking, manufacturing, and distribution, will require leaders who are experts in restructuring and reinvention.

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