AFP, published on Wednesday, October 12, 2022 at 04:09
Global economic activity, shaken by repeated shocks for a year, is getting closer to recession, which could affect several developed countries in 2023, the IMF warned on Tuesday when it published its report. report on the economy.
US President Joe Biden himself has raised the possibility of a “very mild recession” for the world’s largest economy.
Admittedly, the International Monetary Fund (IMF) has maintained its growth forecast for 2022 at 3.2%, already revised three times this year. But it lowered that expected for 2023 again, this time to 2.7%, or 0.2 points less than what was expected in July.
“There is a 25% chance that the global economy will grow by only 2% or less next year,” IMF chief economist Pierre-Olivier Gourinchas told AFP. “This is a situation that has only been experienced five times since 1970, notably during the oil shock or the financial crisis of 2008.”
“And there’s a 10-15% chance that global growth will be below 1%, or stagnant GDP per capita, which would mean things are really bad,” the economist added.
The three global locomotives – the United States, China and Europe – are slowing down, in particular under the effect of persistent inflation which is affecting advanced economies and even more so emerging and developing countries, and which should reach 8, 8% on average worldwide this year (+0.5 points compared to July forecasts).
– Risk of incorrect calibration –
“We are getting closer to monetary tightening but we are not there yet, so central banks need to stay the course,” Gourinchas noted. “But that doesn’t mean they have to slam on the brakes, just that they’ve announced a trend, they have to stick with it.”
On a positive note, however: global inflation should have peaked in the third quarter (9.5%) and start to decline from the last quarter of 2022, continuing this trend next year, to return in the last quarter of 2023 to a level comparable to 2021 (4.7%).
The economic slowdown will affect all of the richest states, starting with the United States: growth there has been revised to just 1.6% in 2022, against 2.3% expected in July. 2023 could be even more difficult, the Fund expecting just 1%.
“I don’t think there will be a recession. If there is, it will be a very mild recession,” Joe Biden said Tuesday in an interview with CNN.
“It’s possible,” he admitted, adding, “I don’t anticipate it.”
The situation is not much better in the euro zone: admittedly, growth should reach 3.1% in 2022, better than expected in July (+0.5 points), but the zone should come close to recession in 2023, 0.5% growth (-0.7 point compared to July forecasts).
And for some Member States, Germany and Italy, recession seems inevitable next year (-0.3% and -0.2% respectively), while France can hope to stay above the line flotation, with growth of 0.7%. Just like, outside the EU, the United Kingdom, at 0.3%.
– Emerging countries resist better –
China, the world’s second largest economy, is expected to experience its worst year in more than 40 years in 2022, if we exclude the pandemic in 2020, with expected growth of just 3.2%, before recovering slightly. in 2023 (4.4%).
Russia, whose economy is bearing the brunt of the sanctions put in place after the invasion of Ukraine, will experience a recession this year, but the situation should be less marked than expected at the start of the summer.
The IMF now anticipates a contraction in GDP of 3.4% for 2022, i.e. 2.6 points better than the forecasts made last July. Russia, however, is expected to be the only economy in the G20, which will meet in Washington on Wednesday, to experience recession this year.
“We anticipate that the recession will continue in 2023 and, in fact, it will continue if we look beyond, there is no recovery in sight for the Russian economy”, underlined the chief economist of the IMF.
In a gloomy global context, the Latin America and Caribbean region is seeing its forecasts improve, with growth now expected at 3.5% (+0.5 points) this year.
The future remains uncertain, however, underlines the Fund, which recognizes that its forecasts, in particular for 2023, are only valid “if inflation expectations remain stable and monetary tightening does not lead to a generalized recession or a disorderly adjustment of financial markets”.