Crédito y Caución anticipates a slowdown in 2024
Crédito y Caución forecasts that global GDP will close 2023 with 2.6% growth. This is an upward revision of four-tenths of a point from the forecast issued six months ago, mainly due to the resilience of US consumption. Although inflation and interest rates have peaked, their significant impact on household and business demand will be felt in 2024 and will weaken growth to 2.1%.
Inflation has clearly passed its peak. The energy component has made a negative contribution to price developments in recent months, both in the United States and the eurozone, and the other components - food, services and goods - are clearly losing momentum. With monetary tightening weighing on demand, both headline and core inflation are expected to fall in 2024.
Against this backdrop, the credit insurer expects global trade growth to slow to 0.8% in 2023 from 3.0% in 2022. Trade growth in 2023 is lower than forecast six months ago, as the end of China's zero covid policy did not generate the expected boost to its exports, and the manufacturing sector is in recession, especially in Europe. Looking ahead to 2024, Crédito y Caución forecasts a recovery in trade growth to 2.5%.
GDP growth in advanced markets will be around 1.6% in 2023 in a scenario marked by high interest rates, low consumer and business confidence and forecasts of slowing demand. Growth in 2024 is expected to be very subdued, at 0.9%. In emerging markets, GDP growth will stand at 4.2% in 2023 and 3.6% in 2024. Behind these figures lies a great deal of heterogeneity. Asian countries will once again lead growth, with India and China as drivers, while Latin America, affected by structural weakness and political uncertainty, will lag behind the other regions.
Crédito y Caución's baseline scenario foresees a fall in inflation due to the effects of monetary tightening on core inflation in a context of no further energy price shocks. However, there are risks that inflation could be more persistent than expected, due to consumption drag or further energy price hikes.
This would lead to a further tightening of monetary policy by central banks leading to a fall in business and household demand in both advanced markets and emerging economies, with significant negative effects on global growth.
