# Global 2023 economic view downgraded, at odds with market optimism: Reuters poll
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-26
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Global Economic Growth Forecast to Barely Clear 2% in 2023
Meta Description: Find out why economists project global growth to barely clear 2% this year amid market optimism, energy price falls, and more. Read more here.
URL: https://financedigest.com/global-2023-economic-view-downgraded-at-odds-with-market-optimism-reuters-pollhtml

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By Hari Kishan

BENGALURU (Reuters) – Global economic growth is forecast to barely clear 2% this year, according to a Reuters poll of economists who said the greater risk was a further downgrade to their view, at odds with widespread optimism in markets since the start of the year.

Falling energy prices, a slowdown in inflation in most economies from multi-decade highs, an unexpectedly resilient euro zone economy and China’s economic reopening have led traders to speculate the downturn will be more mild.

That has driven MSCI’s all-country world index of shares up nearly 20% from October lows, hitting a five-month closing high on Tuesday, despite the [greater risk](https://www.financedigest.com/brexit-the-risks-to-the-city-and-fintech-have-never-been-greater.html "BREXIT: THE RISKS TO THE CITY AND FINTECH HAVE NEVER BEEN GREATER") that central banks will keep interest rates higher for longer rather than cut them.

But economists as a whole were much less upbeat, paring back [growth forecasts](https://www.financedigest.com/gsk-spinoff-haleon-forecasts-2023-organic-revenue-growth-at-top-end-of-view.html "GSK-spinoff Haleon forecasts 2023 organic revenue growth at top-end of view") for this year and next from 2.3% and 3.0%, respectively, in an October 2022 poll to 2.1% and 2.8%, respectively. Their more dour mood flew in the [face of some notable upgrades by banks in recent](https://www.financedigest.com/spains-santander-reaffirms-targets-in-face-of-recent-market-turmoil.html "Spain’s Santander reaffirms targets in face of recent market turmoil") weeks.

The 2023 growth forecast is well behind an International Monetary [Fund forecast of 2.7% that was issued in October and is due to be updated next week](https://www.financedigest.com/rate-rise-fears-prompt-third-week-of-global-equity-funds-outflows.html "Rate rise fears prompt third week of global equity funds outflows"). The latest [Reuters polls](https://www.financedigest.com/germany-home-prices-to-sink-nearly-6-this-year-reuters-poll.html "Germany home prices to sink nearly 6% this year – Reuters Poll") of more than 500 economists covering 45 economies were taken Jan. 5-25.

More than two-thirds of respondents, 130 of 195, said the greater [risk to their world growth](https://www.financedigest.com/retreating-up-the-risk-curve-is-no-solution-to-the-growth-challenge.html "Retreating up the risk curve is no solution to the growth challenge") outlook was that it would be even slower than what they currently expect.

Much will depend on how much success the world’s major central [banks can claim from roughly a year’s worth of historically aggressive interest rate hikes](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets") that are not over yet. The full impact of [rate hikes](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike") can take a year or more to show up in economies.

The [market continues](https://www.financedigest.com/uk-housing-market-weakness-continues-improvement-on-the-horizon-rics.html "UK housing market weakness continues, improvement on the horizon – RICS") to price for a dream scenario of inflation having peaked, then coming down sharply, but not overshooting to the downside,” said market strategists at Rabobank, based on relatively good news in data released in the first weeks of this year.

“However … the range of scenarios ahead is truly broad, and yet the market seems to have settled for a happy median that seems the least likely to transpire.”

GRAPHIC: [Reuters poll](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll") graphic on the global growth outlook (https://fingfx.thomsonreuters.com/gfx/polling/zdvxdrzrjvx/Reuters%20poll%20graphic%20on%20the%20global%20growth%20outlook.PNG)

![](https://onlineworldnews.com/wp-content/uploads/2023/01/120.jpg)

Consensus gross [domestic product growth forecasts for 2023 for more than 80% of economies](https://www.financedigest.com/turkeys-economy-grew-7-6-in-q2-driven-by-domestic-demand-exports.html "Turkey’s economy grew 7.6% in Q2 driven by domestic demand, exports") surveyed were downgraded from the October poll.

Inflation predictions for this year in nearly 80% of economies surveyed, 35 of 45, were upgraded from the October poll, suggesting the bias was for [global central banks](https://www.financedigest.com/global-shares-jump-but-bank-whack-a-mole-not-over.html "Global shares jump but bank ‘whack-a-mole’ not over") to maintain a tighter monetary policy for an extended period of time.

At the same time, [unemployment rates](https://www.financedigest.com/spains-unemployment-rate-inches-up-to-12-87-in-q4-2022.html "Spain’s unemployment rate inches up to 12.87% in Q4 2022") were not expected to climb much from relatively low levels.

That suggests central [banks have no room to even consider](https://www.financedigest.com/5-things-to-consider-when-choosing-a-challenger-bank.html "5 Things to Consider When Choosing a Challenger Bank") lowering rates any time soon.

Nearly all major central banks were expected to hold interest [rates steady](https://www.financedigest.com/shares-steady-dollar-dips-as-us-holiday-lifts-rates-gloom.html "Shares steady, dollar dips as US holiday lifts rates gloom") through the end of this year, a conclusion also at odds with rate futures, which expect easing in the fourth quarter.

The European [Central Bank](https://www.financedigest.com/no-santa-rally-for-markets-as-central-banks-dampen-peak-rate-hopes.html "No Santa rally for markets as central banks dampen peak rate hopes"), the U.S. Federal Reserve and the [Bank of England were expected to hike rates](https://www.financedigest.com/bank-of-england-officials-split-over-future-path-for-rates.html "Bank of England officials split over future path for rates") at each of their next two policy meetings and then hold them steady.

While the [ECB was expected](https://www.financedigest.com/hawkish-ecb-comments-push-up-rate-hike-expectations.html "Hawkish ECB comments push up rate-hike expectations") to deliver larger 50-basis-point hikes, the Fed was forecast to go for smaller 25-basis-point rate rises.

The BoE was forecast to lift its [Bank Rate](https://www.financedigest.com/bank-of-england-set-to-hike-to-4-as-rate-peak-looms.html "Bank of England set to hike to 4% as rate peak looms") by 50 basis points on Feb. 2 to 4.00% and then deliver a quarter-percentage-point hike in March before pausing.

We see good reasons to believe that the [global economy still has a tough year](https://www.financedigest.com/2021-the-year-of-the-global-workforce-for-british-small-businesses.html "2021: The Year of the Global Workforce for British small businesses ") ahead,” economists at Citigroup said.

High inflation and tight monetary policy look likely to plague the outlook, and we wouldn’t be surprised to see renewed tightening in [global financial conditions in coming months.”](https://www.financedigest.com/artificial-intelligence-goes-global-demand-for-ai-reaches-four-continents-in-three-months-new-figures-from-synechron-show.html "Artificial Intelligence goes global: demand for AI reaches four continents in three months, new figures from Synechron show")

GRAPHIC: Reuters poll graphic on the key global central [bank interest rates](https://www.financedigest.com/bank-of-englands-mann-doubles-down-on-backing-for-rate-hikes.html "Bank of England’s Mann doubles down on backing for rate hikes") (https://fingfx.thomsonreuters.com/gfx/polling/znpnbzrzmpl/Reuters%20poll%20graphic%20on%20the%20key%20global%20central%20bank%20interest%20rates.PNG)

![](https://onlineworldnews.com/wp-content/uploads/2023/01/121.jpg)

When asked to list the biggest threat to global [economic growth](https://www.financedigest.com/addressing-the-credit-gap-to-unlock-economic-growth-in-africa.html "Addressing the credit gap to unlock economic growth in Africa") in 2023, more than 85% of economists, 171 of 196, were split nearly evenly between tighter monetary policy (90) and persistently higher inflation (81).

Fifteen pointed to the Russia-Ukraine war, eight nodded to an asset price correction, one said a resurgence of COVID-19, and one said weaker-than-expected [labour markets](https://www.financedigest.com/spains-labour-market-resilient-as-unemployment-drops-in-nov.html "Spain’s labour market resilient as unemployment drops in Nov").

(For other stories from the Reuters [global economic](https://www.financedigest.com/global-economic-crisis-strangling-progress-for-poor-warns-u-n-development-chief.html "Global economic crisis strangling progress for poor, warns U.N. development chief") poll:)

[(Reporting by Hari Kishan and Sarupya Ganguly; Polling, analysis and reporting by the Reuters](https://www.financedigest.com/indonesia-to-tighten-used-shoe-import-controls-after-reuters-report.html "Indonesia to tighten used shoe import controls after Reuters report") Polls team in Bengaluru and bureaus in Buenos Aires, Cairo, Istanbul, Johannesburg, London, Shanghai, and Tokyo; Editing by Paul Simao)


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