A recent study conducted by the Peterson Institute for International Economics (PIIE) finds that although there is a possibility that the rate of economic expansion around the world could slow down significantly, a recession is not currently anticipated to occur.
The study with a publication date of September 26, 2023 and which is included in PIIE's Fall 2023 Global Economic Prospects forecasts that the global GDP will expand by 3 percent in 2023, which represents a moderate slowdown from the 3.4 percent expansion that occurred in 2022. Even lower growth of 2.8 percent is predicted for the year 2024 by the organization.
In addition to that, the study provided details regarding a variety of forecasts pertaining to other key economies. The United Kingdom is currently going through a mild recession, and economists anticipate that its GDP will fall by 0.3% in 2023. While it is anticipated that the economy of the Euro area will experience only moderate expansion, the Chinese economy is still being held back by the protracted housing crisis and unsustainable levels of local government debt.
The analysis focused on three distinct risk scenarios that could lead to a decline in global economic activity and have a disproportionately negative impact on the United States. A reacceleration of inflation due to disturbances in global commodity markets, an underlying demand in the United States that is higher than anticipated, and a global economic malaise emanating from Europe and China are some of these factors.
According to Karen Dynan, a nonresident senior fellow at PIIE, "While inflation appears to be receding in most countries, it remains decidedly above central bank targets. Most countries will experience below-trend-but-positive growth as inflation moderates, not recessions."
Despite seeing more robust growth than was anticipated this year, Dynan predicts that the economy of the United States will continue to face challenges in the form of a potential shutdown of the federal government, the beginning of payments on student loans, and a protracted strike by the United Automobile Workers (UAW). It is possible that these causes will cause a slowdown in economic activity in the United States during the fourth quarter of the year 2023.