Global economic “optimism” in 2023: resilience and fewer recessions than before

by **Rocky** Thu 24 Nov 2022, 6:34 am

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Global economic “optimism” in 2023: resilience and fewer recessions than before

by Rocky Thu 24 Nov 2022, 6:34 am

Global economic “optimism” in 2023: resilience and fewer recessions than before

Shafaq News / Today, Thursday, an economic analysis expects that the world will witness "flexibility" and "not deep" economic recessions in 2023, compared to the economic situation of the current year and the repercussions of the Corona pandemic.

According to an analysis published by The Wall Street Journal, the year 2022 is drawing to a close, exceeding scenarios that economists feared, which may give an indication that the world will avoid a deep recession in 2023.

The analysis indicated that "economic indicators are still sending mixed messages, as figures revealed a decline in production in November in the largest economies of the United States and Europe, but at the same time they showed some kind of flexibility despite the increase in inflation and high interest rates."

In China, where the second largest economy in the world is, the outlook "is still uncertain, as a recovery in growth is expected during 2023, while Beijing is trying to ease the policies it imposed due to Corona."

The analysis confirms that "the outlook for the US economy depends in part on its interaction with the interest rate increases imposed by the Federal Reserve to curb inflation, which has reached unprecedented levels over the past four decades," according to Reuters.

US business activity shrank for the fifth month in a row in November, with the new orders index dropping to its lowest level in two-and-a-half years as higher interest rates slowed demand.

Other data showed that the number of Americans filing new applications for unemployment benefits rose more than expected last week.

He notes that Europe's economies are suffering less disruption from energy cuts from Russia than analysts feared earlier this year.

"It is likely that the United States and the European Union will experience relatively short recessions that will not be deep, and may return to growth by the fourth quarter of 2023," the newspaper quoted Adam Posen, president of the Peterson Institute for International Economics, as saying.

Despite the optimism of some, the World Bank continues to warn that developing countries "will face additional risks, as the policies adopted by advanced economies to address inflation and economic slowdown may leave insufficient capital for poor countries," according to the bank's president, David Malpass, in recent statements.

And US companies indicate that inflationary pressures diminished in November with "a decline in material prices and freight costs", but the economic cost of high energy prices still remains a burden on European companies.

The analysis confirms that the global economic prospects are "still uncertain", as there are questions related to reducing inflation in the United States, and the extent to which the Federal Reserve will continue to resort to raising interest rates, which affects borrowing costs and threatens growth in the United States.

Economists from the Federal Reserve told policymakers that the chances of a recession in the United States have increased by about 50 percent due to the risks of slowing consumer spending and global risks, according to a report published by Bloomberg.

These expectations were contained in the minutes of the Federal Reserve meeting for the month of November, which indicated a possible slowdown in raising interest rates soon.

Since the last meeting, which was held on the first and second of November, investors have become more optimistic about the decline in price pressure, which indicates that raising interest rates by a smaller amount may limit inflation, according to Reuters.

The Bloomberg report shows that "slowing growth and deteriorating global prospects ... are all factors that are seen as risks that will decline real activity," not to mention that reducing inflation may require tightening fiscal policy.

And in the event that the risks that discourage real activity persist, the economy may “enter into a recession at some point during the next year,” according to the report.

These economists play an influential role on the Federal Reserve Board of Governors and in the monetary policy-making process.

The Wall Street Journal analysis warns of "economic headwinds that may face the economies of European countries in the coming months, especially with the threat of the Russian company Gazprom to clamp down on exports to Europe."

Economists expect global GDP to rise by about 2 percent next year, which will be less than the average of 3.3 percent achieved over the past decade.

Amid these mixed messages, economists still worry about a global recession in 2023, and some expect the United States to make small gains over the next year, with US output growing at a rate of 0.5 percent in 2023.
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Established in 2006 as a Community of Reality

Established in 2006 as a Community of Reality

Global economic “optimism” in 2023: resilience and fewer recessions than before

Global economic “optimism” in 2023: resilience and fewer recessions than before

Global economic “optimism” in 2023: resilience and fewer recessions than before

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