POLL Global 2023 economic outlook downgraded at odds with market optimism |

BENGALURU, 26 january (Reuters) – Global economic growth is forecast to reach 2% this year, according to a Reuters poll of economists who said the bigger risk was a further slowdown. the beginning of the year.

Falling energy prices, inflation in most economies below multi-decade highs, an unexpectedly resilient euro zone economy and China’s economic reopening have led traders to expect a milder recession.

That lifted MSCI’s country-wide world stock index (.MIWD00000PUS) from October lows by about 20% rose and hit a five-month high on Tuesday despite the risk that central banks will keep interest rates higher for longer instead of cutting them. they are.

But overall, economists were less optimistic, cutting their growth forecasts for this year and beyond to 2.1% and 2.8%, respectively, from 2.3% and 3.0% in the October 2022 survey. Their more dour sentiment flies in the face of some notable improvements by banks in recent weeks.

The growth forecast for 2023 is well below the 2.7% forecast released by the International Monetary Fund in October and to be updated next week. The latest Reuters poll of more than 500 economists covering 45 economies 5-25 january was held on

More than two-thirds of respondents, 130 out of 195, said the bigger risk to their outlook for global growth is that it will be slower than they currently expect.

Much will depend on how much success the world’s major central banks can get from the historically aggressive rate hikes that have yet to come to an end, nearly a year from now. It may take a year or more for the full impact of interest rate hikes to show up in economies.

“The market continues to price in for the dream scenario of inflation peaking and then falling sharply but not going down,” said market strategists at Rabobank, citing relatively good news in data released in the first weeks of this year.

“But … the range of scenarios ahead is really wide, and yet the market seems to have accepted the least likely happy medium.”

Reuters global growth forecast survey chart

For more than 80% of the economies surveyed, consensus forecasts for gross domestic product growth in 2023 were downgraded from the October survey.

For this year in about 80% of the economies surveyed inflation forecasts were updated by 35 out of 45 from an October survey, suggesting global central banks are biased towards continuing tighter monetary policy for an extended period.

At the same time, unemployment rates were not expected to rise much from relatively low levels.

This means that central banks have no room to consider lowering interest rates anytime soon.

Almost all major central banks were expected to hold interest rates steady until the end of this year, contradicting interest rate futures that expected a cut in the fourth quarter.

Europe Central Bank, USA The Federal Reserve and the Bank of England were expected to raise interest rates at each of the next two policy meetings and then hold them steady.

The Fed was forecast to go for a smaller 25 basis point rate hike, while the ECB was expected to deliver a larger 50 basis point rate hike.

On February 2, the BoE’s Bank It was expected to raise interest rates by 50 basis points to 4.00% and then introduce a quarter percentage point hike before pausing in March.

“We see good reasons to believe that the global economy is still in for a tough year ahead,” Citigroup economists said.

“High inflation and tight monetary policy will likely weigh on the outlook, and we would not be surprised to see further tightening in global financial conditions in the coming months.”

Reuters main global central bank interest rate survey chart

When asked to list the biggest threat to global economic growth in 2023, more than 85% of economists, 171 out of 196, identified tighter monetary policy (90) and persistently high inflation (81) divided about equally between.

15 people Russia–Ukraine war, eight pointed to asset price corrections, one pointed to a resurgence of COVID-19, and one labour markets are weaker than expected.

(For other stories from the Reuters global economic survey :)

Reporting by Hari Kishan and Sarupya Ganguly; Survey, analysis and reporting by the Reuters Poll team in Bengaluru and bureaus in Buenos Aires, Cairo, Istanbul, Johannesburg, London, Shanghai and Tokyo. report; Edited by Paul Simao

Our standards: Thomson Reuters Trust Principles.

2023-01-26 04:33:43
Source – reuters

Translation“24 HOURS”