15 Gloomy Forecasts World Economy  2023

15 Gloomy Forecasts World Economy 2023

World Economy  The World Recession is predict by the International Monetary Fund (IMF) to occur. Even a third of the world will experience it. This was stat by IMF Managing Director Kristalina Georgieva last Monday. “We estimate that a third of the world economy will be in recession. Gloomy Forecasts World Economy 2023

He refers to all countries that are the main engines of growth. According to him, the United States (US), Europe and China will experience weaker activity. “2023 will be more difficult than last year as the US, EU and China economies will slow down.  Gloomy Forecasts World Economy 2023

In fact, it is not only the IMF that gives a gloomy forecast. This was also convey by many other parties.

15 Gloomy Forecasts World Economy 2023


1. JPMorgan

JP Morgan in its outlook stat that economic growth in develop countries would have a significant impact on people’s activities if inflation was not successfully suppress. However, if inflation is successfully suppress, then the central bank will stop raising interest rates, and the risk of a recession occurring is very small.

“However, if inflation is not successfully suppress, a worse scenario will occur,” wrote the JP Morgan report entitled ‘Investment Outlook 2023: A Bad year for The Economy, a Better Year for Markets’.


Regarding the importance of US economic progress to the world, Barclays said the economy in Uncle Sam’s country is likely to experience a contraction throughout 2023. This is because wages and inflation in the US are still very high.

“The US unemployment rate is also expect to reach 4.8% this year. Gloomy Forecasts World Economy 2023

3. City

The European Zone and the UK are predict to be the countries with the worst economies in 2023. This was disclos by Citi in its outlook report. “Among the major economies, the Eurozone and the UK are likely to be the worst,” Citi wrote in its report entitled ‘Roadmap to recovery: Portfolios to anticipate opportunities’. “With full year contractions of 0.5% and 1% respectively, due to competing with very high energy costs, as well as policy tightening,” Citi wrote.

4. DBS

DBS said the same about the economy in the Eurozone. In this region it is estimat that economic growth will only reach 3.2% (yoy).”Energy prices and sentiment shocks stemming from the war in Ukraine will definitely dampen growth,” explained DBS in its report ‘Managing Polycrisis’. DBS said, in many countries in Asia, electricity, fuel and food prices have not been fully affect by international prices. Therefore the government and authorities use price controls, subsidies and tax incentive measures to mitigate the impact.

5. Goldman Sachs

Meanwhile, Goldman Sachs in its report ‘Macro Outlook 2023: This Cycle is Different’ estimates that Europe will only experience a mild economic recession. The Blue Continent is expect to succeed in reducing gas imports from Russia and benefiting from the economic recovery after the Covid-19 pandemic.

Goldman Sachs said that the most influential central bank in the world, the Fed, will still raise its policy rate to 5% to 5.25% in 2023. Goldman Sachs revealed that core US PCE (personal consumption expenditure) inflation will fall from the current level of 5%. , to around 3% by the end of next year.

Furthermore, the unemployment rate in the US is estimat to increase by 50 bps. Even though the unemployment rate only increas slightly. Goldman Sachs believes that inflation can  suppress because the current conditions said to  different from the previous high inflation period. First, because the post-pandemic labor market has in fact failed to reduce unemployment in the US. Second, the disinflationary impact of the recent normalization in the supply chain and rental housing market is still far-reaching.

“And third, long-term inflation expectations remain anchored (next year),” wrote Goldman Sachs in its report.

6. UOB

UOB in its report reveal that the global inflation rate. Which is source from core inflation, is expect to subside in 2023. However, it is likely that it will still be on average at the target of 2%. As for the risks that loom in this year. Namely several potential inflation shocks, a new round of rising global energy prices, new disruptions in supply chains, the continuing impact of the Russia-Ukraine conflict, and the threat of a wage-price spiral.

7. Deutsche Bank

Deutsche Bank in its outlook revealed that energy is still a big driver of inflation. Even though world crude oil prices have fallen in recent months in 2022, they are expect to be follow by a sharp increase in 2023. The increase in world crude oil prices this year was caus by an increase in demand due to China’s economic acceleration, but its availability or supply is limit. “Self-imposed production cuts by OPEC and oil companies are inadequate. As well as insufficient production capacity in recent years,” Deutsche Bank wrote.

Efforts by the European Union and the US to exclude Russian oil from the market will also add to the pressure. Meanwhile, gas prices which have recently decreas are still consider expensive, far from the prices before the outbreak of the Russo-Ukrainian war. Overall, Deutcshe Bank predicts 2023 inflation will reach 6% in the Euro zone and 4.1% for the US. High inflation is expect to persist beyond 2023.

“It is unlikely that future inflation will return to the relatively low levels it was before the Covid-19 pandemic,” he wrote.

8. S&P Global

S&P Global Market Intelligence predicts that the economies of countries in Asia Pacific will dominate global economic growth in the coming years. regional economy. Asia Pacific is estimated to grow at least 3.5% (yoy) next year.”Asia Pacific, which contributes 35% of the world’s gross domestic product (GDP), will dominate growth in 2023, supported by free trade agreements between countries there, efficient supply chains, and competitive costs,” S&P wrote in a statement.

9. BNP Paribas

BNP Paribas forecasts a decline in global GDP growth in 2023. This was led by recessions in the US and the eurozone, with below-trend growth in China and many emerging markets. The French bank sees the first quarter of 2023 as a turning point for the US and eurozone government bond markets due to peak central bank policy rates and Quantitative Easing and Quantitative Tightening net supply.

From a fundamental standpoint, sluggish global growth and disinflation point to lower yields throughout 2023.”Despite the possibility of a sharp drop in inflation next year, harsh price pressures look set to send the US Fed and European Central Bank sliding into recession in the first quarter of 2023,” the financial institution wrote.

10. UBS

UBS predicts a historically weak outlook, with global growth of just 2.1% year-over-year in 2023 would be the lowest since 1993 excluding the pandemic and global financial crisis.”With 13 of the 32 economies expected to contract for at least two quarters by the end of 2023, our forecast is close to something akin to a global recession,” the Swiss financial institution said.

Other Forecasts

Apart from financial institutions, there are also economic forecasts that arise from economists. But more to the view of how the economy will be in 2023. Quoting Aljazeera, it’s actually not just a recession, it’s related to inflation, interest rates, to bankruptcy.

Here are their five views:

1. Inflation and Interest Rates

Inflation is expect to decline globally in 2023 but remains very high. Developing countries are expect to see less of a decline, with inflation only project to fall to 8.1% in 2023.”Inflation is likely to remain higher than the 2% that most Western central banks set as their benchmark,” said Alexander Tziamalis, senior economist at Sheffield Hallam University.

“Energy and raw materials will remain expensive for some time. A partial reversal of globalization means more expensive imports. Labor shortages in many Western countries make production more expensive. And green transition measures to combat the greatest threats facing our species  all leading to higher inflation than we were us to during the 2010s,” he explain.

2. Recession

Not only 10 global institutions, the chief editor of The Economist, Zanny Minton Beddoes, emphasized the recession. He paints a bleak picture which is summ up by the emphatic article title ‘Why a global recession is inevitable in 2023’. Even if the global economy does not technically fall into recession, the IMF’s chief economist recently warned that 2023 may still feel like one for many due to a combination of slowing growth, high prices and rising interest rates.”The three largest economies, the United States (US), China and the euro area, will continue to stall,” Pierre-Olivier Gourinchas said in October. “In short, the worst is yet to come, and for many, 2023 will feel like a recession.”

3. China opening

After three years of strict Covid-19 lockdown and testing protocols, China earlier this month began the process of relaxing its controversial zero-Covid policy after mass protests by citizens. With draconian restrictions at home now in the past, China’s international borders will reopen from January 8. The reopening of the world’s second largest economy, which has slowed dramatically over the past year, should inject fresh momentum into the global recovery. The rebound in Chinese consumer demand will provide a boost for major exporters such as Indonesia, Malaysia, Thailand and Singapore.

While the end of restrictions offers relief to global brands from Apple to Tesla who have experienced repeated disruptions under the zero-Covid policy. At the same time, this rapid change carries a lurking risk. Currently, hospitals across China have been flood with patients. In addition, morgues and crematoriums were reportedly overwhelm with the influx of bodies.

Some medical experts estimate that China could see up to 2 million deaths in the coming months. In addition, experts also expressed concern about the emergence of new, more dangerous variants.”Barring this very disruptive opening, I think the market is going to do well,” said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis. “I would say once people see the end of the tunnel, so maybe late January, late Chinese New Year, I would argue that’s when the market will really read China’s rapid economic recovery,” he added.

4. Mass Bankruptcy

Despite the economic devastation wrought by the Covid-19 pandemic, bankruptcies actually declined in many countries in 2020 and 2021 due to a combination of out-of-court arrangements with creditors and heavy government stimulus. In the US, for example, 16,140 businesses filed for bankruptcy in 2021, and 22,391 businesses did so in 2020. This is lower compar to 22,910 in 2019.

However, that trend is expect to reverse again in 2023 amid rising energy prices and interest rates. Allianz Trade estimates that bankruptcy globally will increase by more than 10% in 2022 and 19% in 2023, surpassing pre-pandemic levels.”The Covid pandemic forced many businesses to take out big loans, exacerbating the situation of increasing dependence on cheap loans to make up for the loss of Western competitiveness due to globalization,” said Tziamalis.

5. Disrupted Globalization

Efforts to roll back globalization look set to continue in 2023. Since launching under the Trump administration, the US-China trade and technology war has deepened under US President Joe Biden. In August, Biden signed into law the CHIPS and Science Act that blocked exports of advanced chips and manufacturing equipment to China. This aims to hinder the development of the industry

i semiconductors in China and strengthen self-sufficiency in chip manufacturing.

The passing of the law is just the latest example of a growing trend away from free trade and economic liberalization towards greater protectionism and self-sufficiency, especially in critical industries related to national security. In a speech earlier this month, Morris Chang, founder of Taiwan Semiconductor Manufacturing Corporation (TSMC), the world’s largest chipmaker, lamented that globalization and free trade had been in a moribund stage.

“The West, and in particular the US, are increasingly threaten by China’s economic trajectory and are responding with economic and military pressure against the emerging superpower,” said Tziamalis.”Outright war over Taiwan is highly unlikely but more expensive imports and slower growth for all countries involved in this trade war are almost certain. 15 Gloomy Forecasts World Economy 2023

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