World economy headed for a recession in 2023: Report

The world faces a recession in 2023 higher borrowing costs aimed at tackling inflation cause a number of economies to contract, according to the Centre for Economics and Business Research. The global economy surpassed $100 trillion for the first time in 2022 but will stall in 2023 as policy makers continue their fight against soaring prices, the British consultancy said in its annual World Economic League Table. “It’s likely that the world economy will face recession next year as a result of the rises in interest rates in response to higher inflation,” said Kay Daniel Neufeld, director and head of Forecasting at CEBR. , “The battle against inflation is not won yet. We expect central bankers to stick to their guns in 2023 despite the economic costs. The cost of bringing inflation down to more comfortable levels is a poorer growth outlook for a number of years to come," the report added.

The findings are more pessimistic than the latest forecast from the International Monetary Fund. That institution warned in October that more than a third of the world economy will contract and there is a 25% chance of global GDP growing by less than 2% in 2023, which it defines as a global recessionChina is now not set to overtake the US as the world’s largest economy until 2036 at the earliest — six years later than expected. That reflects China’s zero Covid policy and rising trade tensions with the west slow, which have slowed its expansion..The CEBR takes its base data from the IMF’s World Economic Outlook and uses an internal model to forecast growth, inflation and exchange rates. “The consequences of economic warfare between China and the West would be several times more severe than what we have seen following Russia’s attack on Ukraine. There would almost certainly be quite a sharp world recession and a resurgence of inflation,” CEBR said.