Higher rates will slow down global growth

Global economic growth will slow down to 2.2% in 2023, according to the consensus forecast of international economists surveyed by Focus Economics. Global GDP is expected to increase by 2.8% this year. A slowdown in growth amid tightening monetary policy and the exhaustion of the recovery effect after the pandemic will affect developed countries, as well as developing countries in Asia (except China), South America and the Middle East. At the same time, the countries of Eastern Europe, as experts believe, will return to growth.

77% of those polled expect official confirmation of a US recession next year. 45% assess the impact of the cost of energy resources on the industry of European countries as “significant”, 55% – as “moderate”. 64% do not expect the conflict in Ukraine to end in the next 12 months. In general, experts expect a slowdown in euro area GDP growth from 2.8% this year to 0.5% next.

The growth of the Chinese economy in 2023 may accelerate from 3.4% this year to 5%. At the same time, such relatively low rates will affect global growth, since the PRC accounts for a fifth of global GDP (purchasing power parity). Experts disagree on when the authorities of this country will end the policy of “zero tolerance” for the coronavirus – this is possible both at the beginning of next year and beyond. For Russia, economists predict a decline of 5.9% this year and 3.3% next year.

Inflation will peak at the end of this year and will slow next year, but will remain high in many developing countries due to the weakening of their currencies. Inflation in the G7 countries will be lower than in most other regions. Commodity prices, as follows from the consensus forecast, will be slightly higher in 2023 than at the beginning of this year. Oil will fall in price to $90 per barrel, as risks, economists point to the impact of the OPEC + deal on prices and a further reduction in Russian supplies. Central bank rates at the end of next year are expected to remain at the level of 2022: weakening inflation will allow most regulators to complete the tightening cycle by then. The Fed rate may peak in the first quarter of 2023 (averaged 4.06% against the current 3-3.25%), and the ECB (2.34% against the current 1.25%) in the third quarter of this year.

Tatyana Edovina