Citigroup on Wednesday forecast global growth to slow to below 2 per cent next year, echoing similar projections by major financial institutions such as Goldman Sachs, Barclays, and J.P. Morgan.
Strategists at the brokerage cited continued challenges from the COVID-19 pandemic and the Russia-Ukraine war — which skyrocketed inflation to decades-high levels and triggered aggressive policy tightening — as reasons behind the outlook.
“We see global performance as likely (being) plagued by ‘rolling’ country-level recessions through the year ahead,” said Citi strategists, led by Nathan Sheets.
The Wall-Street investment bank also expects growth in the U.S. economy to more than halve to 0.7 per cent in 2023 from its earlier projection of 1.9 per cent growth in 2022.
It expects year-on-year U.S. inflation at 4.8 per cent next year, with the U.S. Federal Reserve’s terminal rate seen between 5.25 per cent and 5.5 per cent.
Among other geographies, Citi sees the UK and euro area to fall into recession by the end of this year, as both economies face the heat of energy constraints on supply and demand front, along with tighter monetary and fiscal policies.
For 2023, Citi projects UK and euro area to contract 1.5 per cent and 0.4 per cent, respectively.
In China, the brokerage expects the government to soften its zero-COVID policy, which is seen driving a 5.6 per cent growth in gross domestic product next year.
Emerging markets, meanwhile, are seen growing 3.7 per cent, with India’s 5.7 per cent growth — slower than this year’s 6.7 per cent prediction — seen leading among major economies.
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