Christian Sewing, CEO of Deutsche Bank, attends a session at the 50th annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 23, 2020.
Denis Balibouse | Reuters
Europe and the US face a high possibility of recession as central banks are forced to tighten monetary policy to fight inflation, according to the report. Deutsche Bank CEO Christian Sewing.
Central bank leaders and economists around the world have acknowledged that the drastic tightening that may be needed to rein in inflation could risk pushing economies into recession, with Growth has slowed due to a combination of global factors.
Europe’s close proximity to war in Ukraine and reliance on Russian energy imports make the continent vulnerable to conflict and potential stop of Russian gas lines.
“It’s clear that if Russian gas were to suddenly shut down, the chances of a recession coming earlier are obviously much higher. There’s no doubt about it,” Sewing told CNBC’s Annette Weisbach during a call. Exclusive interview.
“But I would say that overall, we have such a challenging situation that the probability of a recession happening in Germany, or in Europe in 2023 or a year later, is higher than what we already have. seen in any previous year, and not just the impact of this terrible war, but look at inflation, see what that means for monetary policy.”
Along with inflation stemming from the war in Ukraine and related sanctions on Russia, supply chains are also hampered by resurgent demand after the pandemic and the return of Covid-19 control measures. , most notably in China.
“It’s a challenging situation where we have three, four drivers that can have a serious impact on the economy, and all of that combined in one concurrency means there’s enough pressure,” he said. and a lot of pressure on the economy, and therefore the probability of a recession happening in Europe, but also in the US, is quite high,” Sewing said.
Given this mix of challenges, Sewing said he’s increasingly reluctant to rely on traditional models as the economy faces a “perfect storm” with “three or four levers that really work.” can cause a recession, at the end of the day”.
However, Mr May said inflation was the biggest concern.
“I would say that inflation is the thing that really worries me the most and so I think the signal that we’re getting from the central banks, maybe the Fed and now the ECB, is the signal. right,” he said.
“We need to fight inflation because at the end of the day, inflation is the biggest poison to the economy.”