The global economy is set to surpass $100 trillion for the first time in 2022 but will stall in 2023 as policymakers continue their battle against rising prices, the British consultancy said in its annual World Economic League table.
“It is likely that the world economy will go into recession next year as a result of interest rate hikes in response to high inflation,” said Daniel Neufeld, director and head of forecasting at CEBR.
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The report said, “The battle against inflation is not yet won. We expect the central banker to stick around in 2023 despite the economic cost. The cost of bringing inflation down to more comfortable levels is a poor growth outlook for many years to come.
The findings are more pessimistic than the International Monetary Fund’s latest forecast. That institution warned in October that the world economy would contract by more than a third and there was a 25% chance of global GDP growing by less than 2% in 2023, in what it defines as a global recession.
Nevertheless, by 2037, world GDP will double, as developing economies catch up with the rich. The changing balance of power will see East Asia and the Pacific region account for more than a third of global output by 2037, while Europe’s share will drop to less than a fifth.
CEBR takes its base data from the IMF’s World Economic Outlook and uses an internal model to forecast growth, inflation and exchange rates.
China is no longer set to overtake the US as the world’s largest economy until 2036 at the earliest – six years later than expected. This reflects China’s zero COVID policy and rising trade tensions with the West, which have slowed its expansion.
CEBR had originally hoped for the switch in 2028, which it pushed back to 2030 in last year’s league table. It now thinks the cross-over point will not occur until 2036 and could come even later if Beijing tries to take control of Taiwan and faces retaliatory trade sanctions.
“The consequences of an economic war between China and the West will be many times more serious than what we saw after Russia’s attack on Ukraine. There will almost certainly be a much sharper world recession and a resurgence of inflation, CEBR said.
“But the damage to China will be many times greater and could thwart any attempt to lead the world economy.”
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It also predicted:
- India to become $10 trillion economy in 2035 and third largest economy in the world by 2032
- Britain will remain the world’s sixth largest economy and France seventh in the next 15 years, but “the absence of growth-oriented policies and a lack of a clear vision of its role Britain is no longer poised to grow faster than its European counterparts”. ” outside the European Union. ,
- Emerging economies with natural resources will get a “substantial boost” as fossil fuels play a key role in the switch to renewable energy
- The global economy is a long way from the $80,000 per capita GDP level at which carbon emissions fall short of growth, meaning more policy efforts are needed to hit the goal of limiting global warming to just 1.5 degrees above pre-industrial levels. intervention is required.