Chief economists have responded to the global energy crisis. Image: REUTERS/Fabian Bimmer
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- 64% of Chief Economists surveyed see the energy crisis easing over 2023.
- Reducing consumption will be the most effective way to ease the crisis in the short-term.
- The energy crisis feeds directly into the cost-of-living crisis, which is also predicted to ease by the end of 2023.
We’re all feeling the pinch of a global energy crisis that’s in full swing, but when can we expect it to get better?
Energy costs have been soaring, creating hardship for many around the world, but the majority of experts surveyed by the World Economic Forum say the pressures are likely to ease over this year.
That reflects the steps taken by policymakers to improve current systems, diversify supply, improve efficiency and change consumption patterns. Specifically, 64% of Chief Economists surveyed said the crisis will be less severe at the end of 2023.
“Nevertheless, the crisis remains far from resolved,” the report says, with multiple short- and long-term measures needing to be implemented to reduce tackle it effectively. The most popular of these is taking more measures to reduce consumption, something that 82% of those surveyed said would be “effective” or “highly effective.”
How is the World Economic Forum facilitating the transition to clean energy?
Longer-term, the economists said improving energy efficiency, more diversification and a reduction in consumption would be key factors in reducing pressure on the system. In particular, diversifying energy sources was a popular choice, with 64% of respondents backing that for the short-term and 90% saying it would help in the long-term.
That echoes the view of the International Energy Agency (IEA), which says that diversification of energy sources may be one long-term positive to emerge from the crisis.
The agency predicts global renewable energy capacity will almost double over the next five years, as governments accelerate work toward renewable energy targets and solar and wind power leading the surge.
Energy crisis impacts the cost of living
The energy crisis feeds directly into one of the other challenges of the year, the cost of living crisis. Again, the majority of economists predict these forces will ease, with 68% predicting the crisis will be less severe at the end of 2023.
Even so, the majority also took the view that energy and food costs will continue to have an adverse impact on households in high- and low-income countries throughout 2023.
“Many households confront a dual challenge of facing relatively high costs for basics such as heating and eating, at the same time as feeling the effects of monetary policy designed to curtail inflation,” the report says. “The continuing impact of the cost of living crisis should not be underestimated.”
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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