Economic Outlook Report: low growth, high unemployment
Allianz Trade's 2023 Spring Economic Report has been released. The report predicts that the crisis in the US banking sector and the energy problem in Europe will shape the year. Due to the slowdown in the housing, manufacturing, and construction sectors, a recession is predicted for the US economy by the end of the year.
In the Eurozone, it is emphasized that the gradual reduction of financial support has slowed down the economic momentum. While the outlook for the Chinese economy is improving, the limited global spread of the resumption of trade activities in the country is noted.
TWO-YEAR TURBULENCE IN THE GLOBAL ECONOMY
According to the report, global growth is expected to slow down to 2.2% in 2023 and increase slightly to 2.3% in 2024. The report also predicts that low demand due to a decrease in consumer purchasing power and an extended replacement cycle for durable goods will continue to cause sluggishness in the manufacturing sector in 2023.
Furthermore, it is emphasized that inflation will significantly slow down in the coming quarters, and it will average 6.6% globally this year. Considering the persistence of core inflation, it is noted that central banks may adopt a more measured approach toward further interest rate hikes.
THE RISK OF NEW BANK FAILURES
According to the Allianz Trade report, there may be some global risks in the coming period. It is predicted that new bank failures and capital market disruptions may come to the fore while trying to restore investor confidence. The report also warns that if the war in Ukraine escalates, the energy crisis in Europe could worsen. The prolonged high inflation increases the risk of policy mistakes by central banks.
The Allianz Trade report predicts that in 2023, global growth will slow down, and the cumulative tightening of monetary policy is expected to have a more significant impact on economic activity and employment.