Chief economist of Tressis Gestion and author Daniel Lacalle predicts a decade of slow economic development for the world’s economies.
Multiple shocks, such as Russia’s invasion of Ukraine and China’s prolonged zero-Covid measures, have impacted economies around the world, driving up inflation and dampening economic growth.
Global GDP growth is expected to fall from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023, according to the latest forecasts from the International Monetary Fund. Fund officials called it “the lowest growth profile since 2001, except for the global financial crisis and the acute phase of the Covid-19 outbreak.”
Inflation is expected to increase from 4.7% in 2021 to 8.8% this year, before falling to 6.5% in 2023 and 4.1% in 2024. This is still above the goal ranges for several major central banks.
On Tuesday, China reassured economists and market investors by announcing that as of January 8, there would be no longer be any quarantine procedures for entering tourists, marking the end of the zero-Covid policy that China has maintained for nearly three years.
On Tuesday’s episode of CNBC’s “Squawk Box Europe,” Lacalle indicated that the “greatest positive” for markets in 2023 was the possibility of a full reopening of the Chinese economy.
For the expansion of the rest of the world, especially Latin America and Africa, “we have been looking at a really grim picture for the Chinese economy,” he said.
German and French exporters have felt the squeeze of the lockdown and the deterioration of the profit environment in China, and this is absolutely going to assist a lot. “The reopening of the Chinese economy is certainly going to give a substantial boost to growth around the world,” he said.
He did, however, imply that this increase will not be enough to return growth rates to pre-pandemic levels for some time.
“I think that we are probably going to enter into a decade of very, very weak growth in which developed nations are going to find themselves lucky with 1% growth per annum, if they are able to accomplish it,” Lacalle said.
“It seems to me that we are experiencing the fallout from the large stimulus packages that were enacted in 2020 and 2021. Potential growth has not materialized to the extent that many economists had hoped.”
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