S&P Global Market Intelligence said the Asia-Pacific region, which produces 35 percent of world GDP, is expected to dominate global economic growth in 2023, supported by regional free trade agreements, efficient supply chains and competitive costs .
“Southeast Asia and India will benefit from trade diversification away from mainland China,” it said in a note on Wednesday.
Meanwhile, it is also expected that the energy and mineral producing sectors of the Middle East and Africa will also achieve moderate growth.
Regarding the US, it said the ongoing financial conditions due to the tightening of monetary policy would propel the US economy into a “mild recession” beginning in the fourth quarter of 2022 and extending through the second quarter of 2023.
This month, it slashed US real GDP growth to (-)0.5 percent from 0.9 in 2023.
“Early recovery is sluggish, leaving real GDP growth at only 1.3% in 2024. The slowdown will drive a reversal in employment and industrial production, which posted solid gains in the third quarter of 2022. We anticipate the US unemployment rate to rise by September. from 3.5 percent in the U.S. to 6.0 percent by the end of 2023.”
On global inflation, it said achieving central bank inflation targets would be a multi-year process, with “significant progress” expected in 2023.
Global consumer price inflation is projected to slow from 7.7 percent in 2022 to 5.1 percent in 2023 and 3.0 percent in 2024, provided inflation in advanced economies stabilizes at 2.1 percent.
Global real GDP growth is projected to slow from 5.9 percent in 2021 to 2.8 percent this year and 1.4 percent in 2023, thus avoiding an “outright recession”. A recession now appears in Europe and North America – economies that produce half of global output – in late 2022 and early 2023.
“The global economic situation continues to deteriorate as inflation remains uncomfortably high and financial market conditions remain dire. A slowdown is expected in Europe, the United States, Canada and parts of Latin America in the coming months. With moderate growth in Asia Pacific, the Middle East, and Africa, the world economy may avoid a recession, said Sarah Johnson, executive director of economic research at S&P Global Market Intelligence, but growth will be minimal.
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