Forecast for positive but weak global growth

Global economic forecasting firm Oxford Economics says the threat of an international recession has increased, but it believes that the probability of a global financial crisis-style downturn is remote.

Ben May, who is the organisation’s director of global macro research, said they still saw positive but weak growth as “the most likely scenario”.

“The risk of global recession over the coming quarters has clearly grown. But rather than the increasingly common belief that swathes of major economies are heading into recession, we think global growth will bounce back strongly in quarter three,” he said in a new analysis on the world economy.

“And beyond that we still think that policymakers stand a good chance of generating a soft landing.”

He added: “Key to our view is a quick retreat in inflationary pressures in early 2023 as the push from pandemic distortions fades and, as the recovery weakens, margins narrow and commodity price growth slows.”

His assessment was that policymakers “won’t need to push economies into recession to sap inflation. So a sharper than expected easing in inflation could allow policymakers to declare victory early next year and pivot to a less hawkish stance”.

May said Oxford Economics had “substantially downgraded our global GDP growth forecast for 2023 to reflect the now likely slower and bumpier path for the recovery. Reflexively, this makes recession more likely”.

“But we still see the most likely scenario as positive, but weak growth. If we are wrong and a recession does occur, we expect it would be short and mild. We still consider the probability of a global financial crisis-style recession to be remote,” he stated. (SC)

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