2023 Predictions: Is a Global Recession Inevitable?
The DRI International Future Vision Committee has released its 8th Annual Predictions Report, looking ahead to 2022 and its impact on the resilience community. Download the complete report free from the DRI Library, and read on for a prediction about the world economy.
Prediction 2: Inflation and high interest rates will fuel low growth or recession.
Michael Schumacher, Head of Macro Strategy at Wells Fargo recently told CNBC that in his view 50 percent of the world economies will be in recession during 2023. The main reason for such a pessimistic outlook is rising inflation, which forces central banks to hike interest rates.
Not everyone agrees. Although the situation varies from country to country, the trend seems to suggest that inflation is being stabilized. It has already fallen to some degree in the U.S., and as the economy shows signs of underlying resilience, it may escape recession entirely. Interest rates, however, are likely to remain high with the Federal Reserve indicating further rate hikes over the next year. Europe is a problem region as a result of its high dependency on imported gas and oil – particularly from Russia. However, the wholesale price of natural gas, which rose sevenfold between the Russian invasion and the end of September 2022, has now more than halved. Food inflation remains a problem in Europe (particularly the UK), while increased wage demands add to inflationary pressure.
Asia’s short-term economic fate depends upon whether China can reopen quickly enough following its adoption of a zero-COVID-19 policy. Supply chain challenges will ease somewhat if this is the case, but that will not show through significantly until late 2023. While supply chains are stretched, inflation is likely to continue at a higher level than has become considered normal and central bank interest rates will reflect that reality.
Join us for DRI2023 in Austin, TX, Feb. 26 – Mar. 1, 2023, where Future Vision Committee Chair Lyndon Bird will lead an interactive session where participants will have the opportunity to vote on a number of the key issues which have emerged from the reports. Bird will respond to voting as it happens, providing instant feedback and opinion. Please come to this session ready to participate, debate, and even argue if you wish. Challenging and controversial opinions are welcome.