Jane Fraser, the CEO of Citigroup, an American multinational investment bank and financial services told CNBC that she believes Europe is on the verge of a recession.
Fraser, speaking at the World Economic Forum on Monday, said that a combination of factors, including the war in Ukraine and the resulting energy crisis, has left Europe vulnerable to a significant downturn, despite signs of resilience in other parts of the world.
“Europe is right in the middle of the storm,” she said, referring to supply chains, the energy crisis, and the proximity to some of the atrocities taking place in Ukraine.
“Yes,” Fraser said when asked if those factors had convinced her that Europe would go into recession.
European energy costs have risen sharply in recent months as a result of Russian sanctions, while a general rise in inflation is fueling a cost-of-living crisis.
The United States, which has shown “more resiliency” in the economy, labor market, and among consumers so far, may be able to avoid a recession, according to Fraser.
Still, as inflation rises, a lot depends on how the Federal Reserve implements its rate-hiking strategy.
She explained, “There’s some buffer there.” “To be seen if it’s used wisely or not.” Meanwhile, Asia is recovering well from the Covid-19 pandemic and displaying “a sense of optimism,” according to her.