World economy will face recession in 2023, warns CEBR
Those recession fears we have been harboring for a while might become true. According to the Centre for Economics and Business Research (CEBR), the world is walking into a recession in 2023. At its annual World Economic League, the British consultancy said that higher inflation will be the chief cause of the recession next year.
Why does this story matter?
The global economy narrowly avoided a recession in what was a rather topsy-turvy 2022. Now that we approach the end of this year, hopes are riding high for a better 2023. However, CEBR's prediction for next year is a warning shot. For those of us who hoped to leave the worst behind in 2022, it may not be as easy as we imagined.
Central banks will keep interest rates high to fight inflation
CEBR said that the world is likely to face a recession in 2023. This will be triggered by central bankers keeping interest rates high in response to higher inflation. "The battle against inflation is not won yet. We expect central bankers to stick to their guns in 2023 despite the economic costs," said CEBR. Bringing inflation down will lead to a poor growth outlook.
China will not overtake the US till 2036: CEBR
CEBR's forecast for the future talked about China's rise to the top. The consultancy had previously expected China to overtake the US as the economic leader of the world in 2030. However, now it does not expect the switch to happen until at least 2036. China's slowdown is a result of its zero COVID policy and trade tensions with the West.
Military action against Taiwan will affect China's ascendancy
Per the consultancy, China's rise to the top will be further delayed if it goes through with military action against Taiwan. According to CEBR, the consequences of an economic war between China and the West would be much more severe than the Ukraine-Russia crisis.
India will become the 3rd $10 trillion economy
India will become the world's third-largest economy by 2037, said CEBR. According to the consultancy, India's average annual GDP growth rate will be 6.4% for the next five years and 6.5% for the next nine years. The CEBR report also said that India will be the third $10 trillion economy in the world. It classified India as a lower middle-income country.
JP Morgan, Goldman Sachs, and IMF have also issued warnings
Jamie Dimon, the CEO of JP Morgan & Chase, said in October that recession can be expected in 6-9 months. David Solomon, the CEO of Goldman Sachs, too said that recession is around the corner. IMF joined the list by saying, "2023 will feel like a recession." Amazon founder Jeff Bezos warned against large purchases as he thinks recession is a possibility next year.
