RIYADH: The world is heading towards a recession in 2023 as higher borrowing costs aimed at tackling inflation are set to push a number of economics into contraction, according to the Centre for Economics and Business Research.
While the global economy surpassed $100 trillion for the first time in 2022, the British consultancy firm noted that the growth is going to stall in 2023, as the world continues its fight against soaring prices.
“It’s likely that the world economy will face recession next year as a result of the rises in interest rates in response to higher inflation,” Kay Daniel Neufeld, director and head of forecasting at CEBR, said.
The report added that “the battle against inflation is not won yet” as central banks across the world will have to continue to “stick to their guns in 2023 despite the economic costs.”
“The cost of bringing inflation down to more comfortable levels is a poorer growth outlook for a number of years to come,” it added.
CEBR’s findings are more pessimistic than the latest forecast from the International Monetary Fundm which warned in October that there is a 25 percent chance of global GDP growing by less than 2 percent in 2023. IMF defines this as a global recession.
Despite the gloomy global outlook, Saudi Arabia’s economy is expected to grow strongly in 2022, with its output set to be 4.8 percent higher than in 2021, as the recovery from the pandemic continues, CEBR noted.
The British firm, which released its annual World Economic League Table, said the Kingdom is forecasted to witness an average annual growth rate of 2.2 percent between 2023 and 2036. “This will see Saudi Arabia climb from 19th place in the World Economic League Table in 2021 to 17th place by the end of that period,” it added.
CEBR pointed out that Middle East’s second-largest economy is heavily dependent on natural resources, with oil accounting for 90 percent of Saudi Arabia’s total exports and 42 percent of the national gross domestic product, according to the CIA World Factbook.
It stressed that the diversification efforts undertaken by the Kingdom will be key to its future prosperity.
With the Saudi Government taking active steps towards this goal via strategic frameworks such as Saudi Vision 2030, the report said this framework will seek to increase non-oil international trade, promote investment opportunities and strengthen the public sector.
