Global GDP will grow 1.5% in 2023 and 2.9% in 2022: IIF

The world economy will register growth of 1.5% in 2023, which incorporates a significant slowdown from 2.9% that it will reach this year, reveals information from the Institute of International Finance (IIF).

This performance incorporates the expectation of an economic contraction in the United States, of 0.1%, which will contrast with the 2% that they expect will reach in 2022.

In its global forecast update, the largest association of internationally operating financial institutions noted that this performance will leave the economy weaker than it was perceived in 2009, during the global financial crisis.

According to his forecasts, this weakness results from the remnant left by the pandemic and the heterogeneous recovery of the countries. They add inflation, tightening global financial conditions, rate hikes and uncertainty over Russia’s war in Ukraine as factors fueling global economic weakness.

They highlighted the situation for Latin America, which is saved by the positive effect of higher prices of raw materials.

In the analysis, entitled “Global recession in 2023”, they anticipate a 2% contraction of GDP in the euro zone, a 1% advance in GDP in the United States and a growth of 1.5% in Japan.

“We have remained substantially below the consensus for a recession in the United States. We forecast growth of 1.5%, which is weak, but not recessive.”

LA, favorable context

The positive point for the IIF economists is the resistance that the Latin American economies will continue to show. From his perspective, exporters of raw materials are benefiting from food and energy prices, which will favor a 1.2% increase in GDP. This record will be experienced after a growth of 3.7% that they project will be reached in 2022.

To achieve this performance, they estimate a contribution of 1.8% to Brazil’s GDP, which also incorporates a slowdown from 2.9%, which they estimate will grow this year.

They anticipate for Mexico that it will be able to overcome the recessive environment of its main trading partner, the United States, so they project that the Mexican GDP will achieve an increase of 0.9 percent in 2023. This performance contrasts with the 2.7% expected for this year.

War uncertainty

The IIF was one of the first organizations to warn that the persistence of Russia’s invasion of Ukraine would have major economic consequences for global activity and prices.

“Uncertainty around these prospects is high and depends mainly on the direction of the war in Ukraine.”

ymorales@eleconomista.com.mx