The British Economic and Business Research Center announced that the world will face a recession in 2023, as high borrowing costs, which are essentially an attempt by central banks to tackle inflation, will lead to a contraction of a number of economies.
The center, which provides its services as a consulting firm, stated in its annual report of the World Economic Association that global gross domestic product exceeded $100 trillion for the first time in 2022, but that it will stop growing in 2023, as policymakers continue their battle against rising prices.
“It’s likely that the global economy will face a recession next year as a result of higher interest rates and in response to higher inflation”, said Kay Daniel Neufeld, director of the forecasting department at the center, according to what was reported by Bloomberg.
The report added, the battle against inflation hasn’t yet been resolved, and we expect central bankers to adhere to their measures in 2023 despite the economic costs, and the cost of reducing inflation to more comfortable levels means weaker growth expectations over the next number of years.
The center warned, about two months ago, that more than a third of the global economy will contract, and that there is a 25% chance of global GDP growth of less than 2% in 2023, which is known as a global recession.
Despite this, by 2037, global GDP will double, with developing economies catching up with richer ones.
The shift in the balance of power will see East Asia and the Pacific region account for more than a third of global output, while Europe’s share falls to less than a fifth.
The center also stressed that the point of China overtaking the United States, in terms of the size of the economy, won’t occur until 2036, and it may come later if Beijing tries to control Taiwan while facing retaliatory trade sanctions.
For months, researchers have warned that the possibility of a global economic recession has become very high, in light of the exacerbating inflation rates, the large rises in interest rates, and the pressures resulting from the Ukrainian crisis and its consequences, which heralds widespread social unrest.
This matter indicates that the risk of a severe global recession is on the rise, for some time, in 2023, the economists of the American company emphasized.
The World Bank has previously warned that the world may be heading towards a global recession, with central banks raising, at the same time, interest rates to combat persistent inflation.
On July 27, the International Monetary Fund said, in a report that the world may soon be on the brink of a global recession, as the economies of the United States, China and Europe slowed sharply, more than expected.