Barclays has lowered their global economic growth prediction for 2023, citing the expectation of continued rises in inflation as the main reason for ‘restrictive’ monetary policy.
Warning that 2023 will likely be one of the weakest years in the past four decades, the bank said a number of advanced economies are likely to enter recession.
They now anticipate global growth to be 1.7% on an annual basis, down from 2.2% in September. For the current year, Barclays anticipates a 3.2% increase.
“With the exception of housing, where activity has taken a big hit, especially in the U.S., policy tightening has not had enough chance to affect large parts of the economy,” the brokerage said.
“That will change next year.”
Investors are fearful of a recession due to the quick tightening of monetary policy by central banks throughout the world in response to skyrocketing inflation aggravated by the Russia-Ukraine conflict.
Europe’s worsening energy crisis and China’s ongoing lockdowns have added to the global economy’s troubles.
Barclays anticipates developed economies to decrease throughout 2023, with UK and Eurozone recessions beginning in the third and fourth quarters of 2022, respectively.
In 2023, the brokerage predicts a 0.1% fall in U.S. gross domestic product due to a prolonged recession.
A gradual shift away from zero-COVID policies, a rise in infections, and a sluggish housing market are cited as reasons for China’s below-consensus growth of 3.8%.
India is expected to be one of the largest contributors to global growth in 2019, but its economy is not huge enough to alter the global outlook. Barclays anticipates India’s annual growth rate to exceed 5 percent in 2023.