Economists issue grim 2023 forecast

The globe will slide into a recession next year as a number of economies will contract due to surging borrowing costs introduced to combat inflation, the UK-based Centre for Economics and Business Research (CEBR) has predicted in its latest report.   

The world economy surpassed $100 trillion for the first time ever in 2022 but will stall in 2023 as “the battle against inflation is not won yet,” while regulators will keep raising interest rates, the consultancy said in its annual World Economic League Table. 

“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 poorer growth outlook for a number of years to come,” the director and head of forecasting at CEBR, Kay Daniel Neufeld, wrote.   

The report’s conclusions are more pessimistic than the most recent forecast by the International Monetary Fund (IMF), which predicted in October that more than a third of the world’s economy will contract in 2023. 

The CEBR, which bases its growth, inflation, and exchange-rate forecasts on data from the IMF and an in-house model, said that “inflation has become the main economic story” of the past year. The analysts warned that “even though we are starting to see price growth decelerating in some economies, volatility in global energy markets and entrenched core inflation suggest that it will remain front and center in 2023 as well.”  

The consultancy also predicted that China would outperform the US and become the world’s largest economy by 2036 – six years later than previously expected, due to the country’s zero-Covid policy and escalating trade tensions with the West, which have slowed its growth.  

According to the study, India’s economy will become the third largest overall by 2032 and will reach the $10 trillion mark by 2035.

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