The world economy is on a path to recovery but the world must stay alert as risks still abound, warned economic experts attending the World Economic Forum’s annual meeting in Davos, Switzerland, which kicked off on Monday.

Harvard University professor Kenneth Rogoff projected the U.S. will see an inflation rate of over 2 percent this year and warned that interest rates may jump higher than market expectations to contain the inflationary pressure.

Debt has snowballed worldwide amid record-low interest rates and a sharper-than-expected rate hike could pose a huge threat to the global economy, he cautioned. The biggest risk factor is China, he said, whose growth has been fueled by massive debt.

David Rubenstein expressed his worries about market complacency. “The biggest concern I have is that most people think there’s no problem of a likely recession this year or early next year,” said the co-founder of the private equity giant Carlyle Group. “Generally, when people are happy and confident, something wrong happens.”

He was joined by Robert Shiller, Nobel Prize-winning economist from Yale University, who drew parallels between today and 1929, before the onset of the Great Depression. Any correction would “probably not be as bad as 1929 but it could be disruptive,” he forecast.

A series of warnings from globally renowned economists and financial executives come at a time when the world equity markets are enjoying uninterrupted rallies on a rosy outlook for the global economy. Korea is not an exception as its major stock indices have been renewing record highs since last year. On Thursday, the benchmark Kospi hit a fresh record intraday high of 2,561.69. The previous high was 2,561.63 recorded on Nov. 2.

“The most significant political risk is the U.S.,” said Joseph Stiglitz, Nobel laureate of Columbia University, adding that U.S. tariffs on solar panels and washing machines are “wrong” and “bad for the global environment.”

U.S. President Donald Trump earlier this week approved recommendations by the U.S. International Trade Commission (ITC) to impose safeguard tariffs on large residential washing machines and solar cells and modules.

By Park Yong-beom and Kim Hyo-jin

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