The World Bank says it is optimistic for 2023, with the global economy not likely to enter a recession despite the turbulence of 2022.
In a podcast this month World Bank chief economist Indermit Gill said even though the past 12 months were “turbulent” for the global economy — underscored by conflict, inflation, food supply crises and the long tail of the Covid-19 pandemic which caused shock waves across the world — the easing of Covid-19 restrictions in China and lower inflation in the US were good news.
World Bank development data group project co-ordinator Raka Banerjee said the pandemic, or more specifically the “fast-moving” Omicron variant that threatened to drag out one of the biggest global economic disruptions since World War 2, as well as Russia’s invasion of Ukraine, “framed the uncertainty around 2022”.
In January, when the World Bank released its Global Economic Prospects report, it expected the world economy to grow about 4%, with the US and EU growing about that much.
The US, EU and China combined contribute more than 60% of the global economic output.
At the time, the World Bank said China would grow 5%, Indonesia by a bit more and India nearly 9%.
Since then, however, China’s zero-Covid policy hit its economic growth prospects and slowed global growth this year. Russia’s invasion of Ukraine plunged Europe into an energy crisis and the hawkish stance of the US against accelerating inflation saw emerging market currencies depreciate, while rising interest rates slowed demand-side GDP growth.
Gill said: “I think that already we are getting some good news out of China in the sense that they’ve stopped trying to kill Covid off completely.”
US economic indicators also show that while it seems clear that some parts of their economy are slowing — including the housing market and housing activity, as well as private sector fixed investment — activity data in key service sectors remains relatively elevated, as reflected in the nonmanufacturing index.
For SA, economists say the better-than-expected third-quarter GDP numbers at 1.6% will push growth to more than 2% for 2022.
Investec chief economist Annabel Bishop expects inflation and interest rates in 2023 to surprise on the downside of what is currently expected.
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