The negative impact of the near-death experience in the US banking sector and the unresolved energy situation in Europe will have significant effects on the rest of this year. Our prediction of a considerable recession in the US towards the end of the year remains unchanged due to a slowdown in housing, manufacturing, and construction, coupled with a stall in economic momentum in the Eurozone as fiscal stimulus is gradually reduced. Although the Chinese economy is showing signs of improvement, the reopening’s global spillovers are limited. We expect global growth to slow down to 2.2% in 2023, with a modest recovery to 2.3% in 2024, except for the US, Germany, Italy, and the UK, where other large advanced economies are expected to avoid recessions. However, emerging markets and commodity importers will continue to face internal and external imbalances. Due to low demand and a longer replacement cycle for durable goods, the manufacturing sector will remain in recession in 2023, resulting in oversupply and deflation of traded goods costs. As a result, delivery times are normalizing, and shipping costs are approaching their pre-pandemic levels. Global trade in goods and services is predicted to increase by only 0.9% in volume terms in 2023 (down from 3.7% in 2022) and decrease by 0.3% in value terms (down from 9.6% in 2022).
Learn what else has caught our eyes here: https://www.allianz.com/en/economic_research/publications/specials_fmo/economic-outlook-2023.html
