Low Growth in Global Economy

According to Danielle Lacalle, author and chief economist at Tressis Gestion, the global economy likely faces a decade of low growth.

Economists worldwide have been facing a multitude of shocks, from Russia and Ukraine issues to China’s zero-Covid measures that have sent high inflation and Dull activity.

The international monetary fund now projects that the world’s rise in GDP will slow down, being 6% in 2021, going down to 3.2% in 2022 and 2.7% in 2023. The fund characterizes this as “the weakest growth profile since 2001, except for the global financial crisis and acute phase of the Covid-19 pandemic.”

While this is happening, Global inflation is forecast to rise from 4.7% in 2022 to 8.8% this year before declining to the target levels for many central banks.

China offered some support to economists and market participants on Tuesday. China officially announced the end of quarantine requirements for inbound travelers on Jan 8—symbolizing an end to zero covid policy that it held for nearly three years.

Lacalle said the potential of a whole opening of the Chinese economy was the most significant needed act.

The market could be expected for 2023.

“We have been looking at a bleak picture for the Chinese economy, which is especially not only for the growth of the rest of the world but partially for Latin America and Africa,” he said.
The reopening of the Chinese economy is going to give a boost to growth all over the world.
French exporters felt the pinch of the lockdown. This China awakening is going to help them.
However, this boost will bring growth levels far from where they were before the pandemic for a while.

Lacalle says that we will move into a decade of inferior growth in which developed economies will find themselves lucky with 1% growth per annum.

Lacalle continued that we live in a backlash of massive stimulus packages implemented in 2020 and 21. That has not delivered the kind of growth that many economists were expecting
Yet despite no future scope, he emphasized that no crisis is on the horizon.

He concluded by saying that markets will be starting to price in an environment in which the situation globally is not of an optimistic level of growth and economic development but avoids financial crisis. If that happens, it is undoubtedly a good thing.

- Published By Team Timeswire

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