The world faces a recession in 2023, as higher borrowing costs aimed at tackling inflation cause a number of economies to contract, according to the Center for Economics and Business Research.
The British consulting firm said in its annual schedule of the World Economy Association that the global economy exceeded $100 trillion for the first time in 2022, but it will come to a halt in 2023 as policymakers continue their battle against rising prices.
“It is likely that the global economy will face a recession next year as a result of higher interest rates in response to higher inflation,” said Kay Daniel Neufeld, Director and Head of Forecasting at CEBR.
“The battle against inflation has not yet been won. We expect central bankers to stick to their guns in 2023 despite the economic costs. The cost of bringing inflation down to more comfortable levels is a weaker growth outlook for a number of countries,” the report added. years to come.”
The results are more pessimistic than the latest forecasts of the International Monetary Fund. That institution warned in October that more than a third of the global economy would contract and that there was a 25% chance of global GDP growth of less than 2% in 2023, which is defined as a global recession.
However, by 2037, global GDP will have doubled as developing economies catch up to wealthier ones. The shifting balance of power will see the East Asia and Pacific region account for more than a third of global output by 2037, while Europe’s share shrinks to less than a fifth.
CEBR takes its primary data from the International Monetary Fund’s World Economic Outlook report and uses an internal model to forecast growth, inflation, and exchange rates.
China is now not ready to overtake the US as the world’s largest economy until 2036 at the earliest – six years later than expected. This reflects China’s policy of not spreading the Corona virus and slowing trade tensions with the West, which slowed its expansion.
CEBR originally expected the turnaround in 2028, which it traced back to 2030 in last year’s league table. It now believes that the crossing point will not happen until 2036 and may come later if Beijing tries to take control of Taiwan and faces retaliatory trade sanctions.
“The consequences of an economic war between China and the West will be many times more severe than what we saw in the aftermath of Russia’s attack on Ukraine. There will almost certainly be a sharp global recession and a return to inflation,” CBR said.
“But the damage to China will be many times greater and this could torpedo any attempt to lead the global economy.”
It also predicted the following:
India will become the third $10 trillion economy in 2035 and the third largest economy in the world by 2032
The United Kingdom will remain the sixth largest economy in the world, and France the seventh, over the next fifteen years, but Britain is no longer ready to grow faster than its European counterparts due to “the absence of growth-oriented policies and the lack of a clear vision of its role outside the European Union.”
Emerging economies with natural resources will get a ‘big boost’ as fossil fuels play an important role in the transition to renewable energy
The global economy is still far from the $80,000 GDP per capita level at which carbon emissions decouple growth, meaning more policy interventions are needed to reach the goal of limiting global warming to just 1.5 degrees above pre-industrial levels. .
(Except for the headline, this story was not edited by the NDTV staff and was published from a syndicated feed.)
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