Rising inflation and its impact on the fast-growing developing world are major risks to the economic recovery this year, CEOs gathering for the annual Davos meeting said on Wednesday.
Business leaders said rising food prices could spark fresh social unrest and pointed to worries over tensions between North and South Korea and Iran and Israel.
“Interest rates are zero today but they can only go up and higher interest rates will drive financing costs up as well,” said John Krenicki, chairman and chief executive of GE Energy and vice chairman of GE. “It’s not just inflation in energy but steel, cooper and general commodities.”
A PricewaterhouseCoopers survey on the eve of the World Economic Forum showed optimism among chief executives has bounced back to almost the same level as before the financial crisis. But CEOs at the event struck a more cautious tone, pointing to the numerous risks which could yet derail the fragile global recovery.
The four-day Forum in the Swiss Alps brings together at least 35 national leaders and over 1,400 business chiefs.