Asia-Pacific region, which produces 35 percent of the world GDP, is expected to dominate global economic growth in 2023, supported by regional free-trade agreements, efficient supply chains, and competitive costs, said S&P Global Market Intelligence.
“Southeast Asia and India will benefit from trade diversification away from mainland China,” it said in a note.
Meanwhile, it also expects that the energy- and mineral-producing regions of the Middle East and Africa too will achieve moderate growth.
About the US, it said the ongoing tightening financial conditions due to monetary policy tightening will tip the US economy into a “mild recession” starting in the fourth quarter of 2022 and extending through the second quarter of 2023.
This month, it revised down US real GDP growth in 2023 from 0.9 to (-) 0.5 per cent.
“The initial recovery is sluggish, leading to real GDP growth of just 1.3% in 2024. The recession will bring reversals in employment and industrial production, which posted solid gains through the third quarter of 2022. We project the US unemployment rate to rise from 3.5 per cent in September to 6.0 per cent at the end of 2023.”
On global inflation, it said that while achieving central bank inflation targets will be a multiyear process, there are possibilities for “significant progress” in 2023.
Global consumer price inflation is projected to slow from 7.7 per cent in 2022 to 5.1 per cent in 2023 and 3.0 per cent in 2024, provided inflation in the advanced economies settles at 2.1 per cent.
Global real GDP growth is projected to slow from 5.9 per cent in 2021 to 2.8 per cent this year and 1.4 per cent in 2023, thus averting an “outright recession”, it said. Recessions now appear likely in Europe and North America–economies that produce half of the global output–in late 2022 and early 2023.
“Global economic conditions continue to deteriorate as inflation remains uncomfortably high and financial market conditions tighten. The months ahead will likely bring recessions in Europe, the United States, Canada, and parts of Latin America. With moderate growth in Asia Pacific, the Middle East, and Africa, the world economy can avoid a downturn, but growth will be minimal,” said Sara Johnson, Executive Director, Economic Research, at S&P Global Market Intelligence.