Bill Gates sees a ‘pretty strong argument’ for a global economic slowdown hitting this year — here’s why
Add the global economy to Bill Gates’ growing list of concerns these days.
On Sunday, the billionaire Microsoft co-founder told CNN’s “Fareed Zakaria GPS” that he believes factors like Russia’s war in Ukraine and the pandemic’s economic fallout create a “strong argument” that the world will see an economic slowdown in the near future.
“It comes on top of the pandemic where government debt levels were already very, very high, and there were already supply chain problems,” Gates said. “It’s likely to accelerate the inflationary problems that rich world economies have, and force an increase in interest rates that eventually will result in an economic slowdown.”
Gates added that countries’ efforts to tamp down rising inflation by hiking interest rates is another related factor that “eventually will result in an economic slowdown.” His comments echoed global leaders like U.S. Treasury Secretary Janet Yellen, who said in April that Russia’s attacks on Ukraine will have “enormous economic repercussions for the world.”
Regulators in multiple countries – like the U.K., India and U.S. – have recently increased their interest rates to combat record levels of inflation, partially stemming from the pandemic’s effects. In the U.S., the Federal Reserve hiked rates by half a percentage point, the largest increase in two decades.
According to the May CNBC Fed Survey, which polled a panel of 30 economists, fund managers and strategists, many experts believe those aggressive rate hikes could end up sparking a recession over the next year. Gates seems to agree, though his warning of a slowdown falls short of a full-on recession prediction.
“I’m afraid the bears on this one have a pretty strong argument that concerns me a lot,” Gates said.
Some forecasters are currently arguing a recession is unlikely, at least in the near-term. Much of Wall Street is still betting against a recession, with Goldman Sachs putting the odds of a recession in the next 12 months at just 15%, though that number jumps to 35% over the next two years.
But you don’t need to be as wealthy as Gates – who boasts a net worth of $120 billion, according to Bloomberg – to be concerned. The stock markets’ recent violent swings, along with the U.S. gross domestic product’s surprising decline at a 1.4% pace in this year’s first quarter, have plenty of people on edge about the economy’s long-term health.
In April, a survey by CNBC and Acorns found that 81% of Americans are worried that a recession will hit the U.S. in 2022. Eight in 10 small businesses surveyed by CNBC in May have the same concern.