The world faces a recession in 2023, higher borrowing costs aimed at tackling inflation cause a number of economies to contract, according to the Center for Economics and Business Research.
The global economy surpassed $100 trillion for the first time in 2022 but will stall in 2023 as policymakers continue their fight against rising prices, the British consultancy said in the Table of its annual World Economic League.
“It is likely that the world economy will face a recession next year as a result of interest rate increases in response to higher inflation,” said Kay Daniel Neufeld, director and head of Forecasting at CEBR. .
The report added that, “The battle against inflation is not yet won. We expect central bankers to stick to their guns in 2023 despite the economic costs. years to come”.
The findings are more pessimistic than the latest forecasts from the International Monetary Fund. That institution warned in October that more than a third of the world economy will contract and there is a 25% chance that global GDP will grow by less than 2% in 2023, which it defines as a global recession.
Nevertheless, by 2037, world gross domestic product will have doubled as developing economies catch up with the richest ones. The shifting balance of power will see the East Asia and Pacific region account for more than a third of global production by 2037, while Europe’s share falls to less than five.
The CEBR takes its base data from the IMF’s World Economic Outlook and uses an internal model to forecast growth, inflation and exchange rates.
China is now not set to overtake the US as the world’s largest economy until 2036 at the earliest – six years later than expected. This reflects China’s zero Covid policy and the slowly rising trade tensions with the west, which has slowed its expansion.
CEBR had originally expected the change in 2028, pushing it back to 2030 in last year’s league table. Now think that the cross-over point will not happen until 2036 and could come even later if Beijing tries to take control of Taiwan and faces retaliatory trade sanctions.
“The consequences of the economic war between China and the West would be many times more severe than what we saw after Russia’s attack on Ukraine. There would almost certainly be a fairly severe world recession and a revival of inflation,” CEBR said.
“But the damage to China would be many times greater and this could torpedo any attempt to lead the world economy.”
It also predicted that:
India will become the third largest $10 trillion economy in 2035 and the third largest in the world by 2032
The UK will remain the sixth largest economy in the world, and France the seventh, over the next 15 years but Britain is no longer set to grow faster than its European peers due to “a lack of policies oriented towards growth and the lack of a clear vision of its role. outside the European Union.”
Emerging economies with natural resources will have a “substantial boost” as fossil fuels play an important part in the shift to renewable energy
The global economy is far from the level of GDP of $80,000 per capita at which carbon emissions are decoupled from growth, which means that more policy interventions are needed to reach the target of global warming would be limited to just 1.5 degrees above pre-industrial levels.
(Except for the headline, this story has not been edited by NDTV staff and is published by a syndicated feed.)
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