CEBR: The world will face a recession in 2023

CEBR: The world will face a recession in 2023

The world will face a recession in 2023 as higher borrowing costs to fight inflation cause several economies to contract.

The world economy topped $100 trillion for the first time in 2022, but will stall in 2023 as policymakers continue to fight rising prices, according to CEBR’s Center for Economic and Business Research.

“The world economy is likely to enter a recession next year as interest rates rise in response to higher inflation,” said Kay Daniel Neufeld, director and head of Forecasting at CEBR.

“The battle against inflation is not yet won,” according to the report. “Despite the economic costs, we expect central bankers to stick to their guns in 2023. The cost of lowering inflation to more manageable levels is a weaker growth outlook for the next few years.” 

The findings are more pessimistic than the International Monetary Fund’s latest forecast, which warned in October that more than a third of the world economy would contract, and there is a 25 percent chance that global GDP will grow by less than 2 percent in 2023, which the IMF defines as a global recession.

Nevertheless, global gross domestic product will double by 2037 as developing countries catch up with richer ones. The changing balance of power will result in the East Asia and Pacific region accounting for more than a third of global output by 2037, while Europe’s share will drop to less than a fifth.