A Bleak Outlook For The Global Economy In 2023
In the past year, the world witnessed significant rises in inflation rates, and global central banks led by the Federal Reserve Bank raised interest rates at a rapid and large pace. The war between Russia and Ukraine continued, and trade operations were greatly disrupted. In light of these difficulties, the economies of China and the United States grew, but not as expected. However, with the continuation of these crises, the economic outlook in 2023 will be darker.
Looking ahead to the global economy in 2023, many international organizations expect the growth rate of the global economy to slow down, and the global economic outlook faces downside risks.
Downside risks are reflected in the global economic outlook
The International Monetary Fund expects global growth to decline from 3.4% in 2022 to 2.9% in 2023 which is below the IMF's historical average of 3.8%.
The United Nations also issued the "Global Economic Situation and Prospects for 2023" report, which predicts that global economic growth in 2023 will decline from about 3% in 2022 to 1.9%, especially considering the strength of the dollar in the currency markets, while the World Bank was more pessimistic. Where the global economy is expected to grow. slowing to 1.7%. In 2023, it was the third lowest in the past 30 years, second only to the global economic recession caused by the COVID-19 pandemic in 2020.
International organizations believe that due to the impact of high inflation and tightening monetary policy, global economic growth will face "headwinds." The World Bank stated that high global inflation prompted many central banks to implement tightened monetary policy quickly and simultaneously, which led to a sharp tightening of financial conditions and a deterioration of confidence. by growth.
The United Nations said in its report: "The rapid and simultaneous tightening of monetary policy has attracted excess liquidity from the market, creating significant indirect negative effects on the global economy and weakening the economic prospects of many countries in the world."
The International Monetary Fund has revised downward economic growth forecasts for the main developed economies in 2023, affected by factors such as high inflation, gloomy economic prospects, and tightening financial conditions. International Monetary Because of the sharper path of interest rate hikes by the Federal Reserve Bank, US economic growth will decline on average to 1.4% in 2023, growth in the euro area is expected to bottom at 0.7%, and growth in the British economy will contract to 0.6%. In 2023, mainly affected by the fiscal and monetary policies in the United Kingdom and the tightening of financial conditions.
The Chinese economy will go "in reverse" in 2023
While international organizations raised their expectations for economic growth in China, the International Monetary Fund expects China's economic growth rate to rise sharply to 5.2% in 2023 with the recovery of economic activities in China and the improvement of the movement of people, and the United Nations expects in the report that with the Chinese government's improvement of policies Epidemic prevention and adoption of favorable economic measures China's economic growth will accelerate this year, reaching 4.8%, and the World Bank expects China's economic growth to rise from 2.7% in 2022 to 4.3% this year.
In the context of relatively slow global economic growth, China is seen as the main "engine" to lift the global economy out of recession in 2023, and the Institute of International Finance said that the slowdown in global economic growth in 2023 will be dominated by Europe, and GDP is expected to grow For the United States by 1% on an annual basis, but China will be the single largest engine of global economic growth this year.