Despite strong interest rate hikes from the Fed and the European Central Bank (ECB), advanced market economies have proven resilient. The United States has managed to avert a recession, although the country is projected to face an economic contraction in the fourth quarter (Q4) of 2023 and the first quarter of 2024 due to the impact of tight monetary and credit policies. Slowing consumer spending is expected to further depress US economic growth.
Meanwhile, the euro area narrowly avoided a significant recession in Q4 2022 and Q1 2023 after Russian gas flows were disrupted. However, weak global trade and slow economic momentum as measured by the purchasing managers index (PMI) could pose recession risks if not improved in the coming months, according to the report.
The global economy is forecast to slow down in the coming months, with the 2023 growth forecast at 2.7% and the 2024 forecast falling to 2.9%. The US is predicted to fall into a recession by the end of 2023, while Europe’s growth remains sluggish. On the plus side, the Indian economy is growing strongly with strong demand and the ASEAN region maintains a healthy growth rate.
Contrary to the expected slowdown in developed markets, the Indian economy is showing strong growth with strong domestic demand and manufacturing activity, mainly driven by pent-up service demand. The recovery in public sector investment is expected to boost India’s economic resilience.
The economies of the Association of Southeast Asian Nations (ASEAN) are projected to maintain healthy growth rates through 2023, albeit without spillover effects from China’s reopening. Notably, Vietnam, Indonesia and the Philippines are expected to grow more than 5%, and Thailand and Malaysia are predicted to grow above 4%.
However, China’s recovery lost momentum after an initial spike in pent-up consumer demand. Despite some measures to support growth, the government is not expected to deliver a substantial stimulus package. China’s 2023 GDP growth forecast has been revised down from 5.8% to 5.4%, the report added.
The Gulf Cooperation Council (GCC) region is projected to remain a bright spot in the global economy in the second half of the year, underpinned by strong non-hydrocarbon growth. In sub-Saharan Africa, the improving outlook is fueled by domestic reform momentum and progress in debt restructuring initiatives in several countries.
Fiber2Fashion (DP) News Desk
