Economic optimism at Davos is 'bizarre' and a prolonged downturn is more likely, says Cloudflare CEO
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- Cloudflare's CEO called the "tenor of optimism" for the economy at the World Economic Forum "bizarre."
- Matthew Prince told Insider a prolonged downturn is likely, in an interview at Davos.
- The war in Ukraine and China's COVID-19 surge are reasons to not be so optimistic, Prince said.
DAVOS, Switzerland — Matthew Prince is among hundreds of CEOs at the World Economic Forum, but the Cloudflare CEO said he doesn't share the same optimism for the economy as some of his peers.
Prince called the "tenor of optimism" at the conference "bizarre," during an interview with Insider's Cadie Thompson in Davos, Switzerland, where many of the world's top economists and business leaders are meeting this week.
"This is certainly, again, the worst economic conditions that we've seen in the history of Cloudflare, in the last 12 years since 2008, 2009," Prince said, adding that it feels like 2001, the last time a lot of tech companies made big layoffs. "The scary thing is, like in 1977, 1978, are we in for just this long, grinding, no growth?"
Some of the world's top economists share Prince's pessimistic view for the economy. In the Chief Economists Outlook report for 2023, economists said, "although there are some grounds for optimism, such as easing inflationary pressures, many aspects of the outlook remain gloomy," pointing to "continuing economic uncertainty and policy challenges of historic proportions."
Of the 22 chief economists surveyed by the WEF, around two-thirds think a global recession is likely this year, and 18% think it is "extremely likely."
Unlike other large tech companies who laid off thousands of employees in 2022 and continue to do so, Prince said the global security network company is in a position where it doesn't have to follow suit and can continue to hire.
"I think we reacted early and we're in a really good position now to go out and really sort of cherry pick who the best people on the market are," Prince said.
The economists in the WEC survey expect layoffs to continue this year, with 86% responding that multinational businesses are likely to cut operational expenses, and 78% expecting more employees to be laid off.
Prince said current events like the war in Ukraine, "instability in the Middle East," and China's COVID-19 surge, have had "hard ripple effects."
"And then you've got an energy crisis over here," Prince said, referencing Europe. "I mean, there's a lot of stuff that's going on again until optimistic stories again."
Some respondents to the WEC's economic outlook survey think some of these issues could become less threatening throughout the year.
Two-thirds of survey respondents think the cost-of-living crisis could be less severe at the end of the year, while close to the same amount of survey respondents think the energy crisis in Europe will also improve by 2023's end.
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