(Reuters) – Global growth is heading for an “increasingly synchronized contraction”, according to economists at Barclays (LON 🙂 said Thursday, citing a deep energy crisis in Europe, continued lockdowns in China and tighter financing conditions across economies.
Barclays has forecast global growth slowing to 2.2% in 2023 from 2.8% this year, and has warned that it expects advanced economies to contract in the fourth quarter with zero growth next year. Global growth reached 6.3% in 2021.
Central banks globally have rapidly tightened monetary policies, in the wake of the Russian-Ukrainian conflict that exacerbated supply chain problems, to keep high inflation in check as economies are still recovering from the pandemic.
A slowdown in global growth would bring the world “close to a global recession,” Barclays said, adding that much of the bad news was already out of reach.
“That’s a bad economic outlook. But it could have been worse. There’s a line between gloom and doom, and that’s where we think the global economy sits.”
Indicators are sending mixed signals about the strength of the US economy amid the Fed’s tightening cycle, the brokerage said, adding that the US will “narrowly” avoid an outright recession next year.
Barclays forecasts a recession in Europe in the first half of 2023 and expects China to see a slight rebound in fourth-quarter GDP growth, below its 5.5% target, with the brokerage also slashing the country’s 2023 GDP growth by 80 basis points. to 4.5%.