The global economy is heading into a decade of low growth, according to acerbating
Factors such as the persistent Covid-19 pandemic and escalating tensions between the U.S. and China. This could have severe implications for businesses and consumers around the world.
Daniel Lacalle, author and chief economist at Tressis Gestion, told CNBC’s “Squawk Box Europe” on Tuesday that the potential for a full reopening of the Chinese economy was “the biggest positive” that markets could expect for 2023.
However, he warned that growth in the developed world would remain sluggish, as central banks keep interest rates low and quantitative easing measures prop up asset prices.
“We are probably looking at a decade of below-trend growth in the developed economies, and that is something that we have to start factoring in when we think about asset prices, when we think about company valuations,” Lacalle said.
The global economy faces a number of challenges in the coming years, including high levels of debt, an aging population and declining productivity.
In its latest World Economic Outlook report, the International Monetary Fund now projects that global GDP growth will slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. The Fund characterized this as “the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the Covid-19 pandemic.”
The IMF also warned that risks to the outlook are “skewed to the downside,” including the possibility of more protectionist trade policies and a failure to contain the pandemic.