Global growth: Still headed towards a recession
After a tumultuous year, we anticipate lackluster growth in 2023, followed by differing recovery paths across countries in 2024. Global growth is likely to slow to +1.4% in 2023 and to recover modestly to +2.8% in 2024, with significant divergence across countries. Advanced economies will register a shallow recession of -0.1% in 2023 (after growth of +2.5% in 2022), followed by a rebound to below-potential growth of +1.5% in 2024. Europe will muddle through the ongoing energy crisis (GDP growth at -0.4% in 2023 and +1.0% in 2024), while the US recovery is constrained by a cautious policy mix (GDP growth at -0.3% in 2023 and +1.6% in 2024). Most emerging countries are facing both external and domestic headwinds in 2023 (GDP growth at +3.3%), before a rebound to +4.3% is expected in 2024.
Global trade continues to slow as industrial activity recedes, despite easing supply-side constraints. The context of oversupply in the manufacturing sector and lower demand does not bode well for trade volume, even though supply chains should continue to normalize. We expect global trade in goods and services to grow by only +0.7% in volume terms in 2023, and contract by -1.3% in value terms. A mild recovery could be expected in 2024, with global trade growth reaching +3.6% in volume terms (and a neutral price effect) – i.e. roughly 1pp below the pre-pandemic long-term average.
In Asia-Pacific, we expect economic growth to reach +3.6% in 2023 and +4.5% in 2024 (after +3.2% in 2022), masking different sets of stories across the region.
China: glimpsing the light at the end of the tunnel
Asian Tigers: caught between high inflation and slowing trade
Southeast Asia: the fading post-Covid tailwind
Insolvencies: further normalization is underway
Latest available data on insolvencies show they are on the upside in a majority of economies of the region (India, Taiwan, Singapore and Hong Kong). In China, the upwards trend reversal is only just starting to show. That being said, most in the region continue to experience insolvencies levels that are well below the pre-pandemic normal. Going forward, we expect the normalization to keep going, due to a partial catch-up of pre-Covid and Covid-related zombie firms and, the triple-whammy of lower demand, squeezed corporate margins and deteriorating financing conditions. We continue to expect business insolvencies to rebound by +19% in 2023 at the global level, after +9% in 2022 and two consecutive years of declines in 2020 and 2021 – meaning that the number of insolvencies in 2023 will be roughly back to the pre-pandemic level. In Asia-Pacific, we expect business insolvencies to increase by +20% in 2023 (after +2% in 2022) – which will bring next year’s number of insolvencies still nearly one-fifth lower than the pre-pandemic level.
While our economic outlook may not be the most heartwarming (at least in the short-term), I do hope that you will share a safe and pleasant end-of-the-year season with your friends and families.
Wishing you a happy, healthy and prosperous 2023!