2023 Global Economic Predictions | The Week

The one question that seems to be weighing on everyone’s mind when it comes to the economy: Will there be a global recession in 2023? Many business outlets, including The Economist, Forbes, and Fortune report that it’s not a question of if, but when, particularly due to the looming economic crisis in Europe. Forbes mused that the possibility of avoiding a recession was possible, but “highly unlikely,” adding that any actions to try and stop a recession would likely just worsen inflation. However, others, including major banking giants like Goldman Sachs, feel that the U.S., in particular, will avoid the economic downturn, with only 35 percent of their analysts thinking there will be a recession — much lower than most other economists. Despite this, it remains clear that most figures of influence in the economic sphere see a recession looming on the horizon in the new year. As Bloomberg noted, “the consensus view is that a recession, albeit mild, will hit both sides of the Atlantic with a high bar for any dovish policy pivot.” Perhaps most worryingly of all was the October economic outlook by the International Monetary Fund, which concluded, “The worst is yet to come and for many people, 2023 will feel like a recession.”

Besides a possible looming recession, the other economic issue on everyone’s mind is rising inflation, and that may not be going away anytime soon. While officials are taking steps to mitigate inflation, the EU is still looking to dust off the wounds of last year. The Associated Press reported that Germany saw inflation rates reach 7.9 percent in 2022 — the highest in that country in 70 years. Things weren’t much better in the United States, where despite evidence that relief from high prices is finally arriving, inflation still rose to its highest level in four decades this past summer. But will things improve in 2023? It seems people are a bit pessimistic on that front. An Ipsos poll of 24,000 adults taken in numerous countries, including the U.S., Canada, Ireland, Israel, Malaysia, South Africa, and Turkey, found that 75 percent of those polled felt inflation would be worse in 2023 than in 2022. They’re not alone, as experts told Reuters that while inflation may fall by up to half its current level, it will likely be a hard landing as the global economy tries to get back on track. 

The cost of living has undoubtedly been increasing for years, and 2022 appears to be no different. But will things change in 2023, or will the average person’s everyday costs continue to climb? Well, the respondents in the Ipsos poll certainly seem to think the latter, with 79 percent of people agreeing that prices in their respective countries would keep rising faster than people’s incomes. This is in line with 68 percent of respondents who felt unemployment would be higher in 2023 than in 2022. In the United States, there were some signs even last year that costs could keep going up through the new year. Last summer, officials announced that Social Security benefits would need a big adjustment to make up for the anticipated cost-of-living difference, with seniors potentially receiving a pay hike of up to 9 percent. However, as Forbes reported, rising global inflation could mean that these increases could still be short-lived for many people, especially given that rising prices often disproportionately affect seniors. Speaking of inflation — one of the main causes of higher prices — a separate Ipsos poll of 36 countries found that seven in 10 people expected the cost of living to rise in 2023.