Soaring prices, war, rate hikes, global warming… Expected to be in good shape in 2022, the world economy has finally suffered a succession of crises aggravated by the Russian invasion of Ukraine, suggesting a dark year 2023.
2022 will remain the year of polycrises, to use the expression popularized by historian Adam Tooze: heterogeneous shocks that interact, making the whole thing overwhelming.
These shocks have increased since the beginning of the century, with the financial crisis of 2008, that of sovereign debts, the pandemic, the energy crisis, underlines with AFP Roel Beetsma, professor of economics at the University of Amsterdam.
For him, the world has not known such a complicated situation since the Second World War.
Persistent inflation
After years of sluggishness, his return was to be temporary, concomitant with the post-pandemic relaunch, the experts said in unison a year ago. The Russian invasion of Ukraine and the energy surge have reshuffled the cards.
Unequaled since the 1970s and 80s, the rise in prices is pushing millions of households in developed countries into precariousness and threatening those in poor countries with increased misery. However, it has started to slow down, 10.1% over one year in November in the euro zone and 5.5% in the United States.
Inflation could fall in 2023 and 2024 in the major developed and emerging countries of the G20, according to the OECD, which recommends, to get out of it, more targeted aid. Particularly in France and Germany, which, like others, have had to reopen the checkbook to help households and businesses.
In the European Union alone, 705 billion euros have been promised to them since September 2021, according to the think tank Bruegel. Of which 264 billion for Germany, where one in two people said they now only buy what is strictly necessary, in a survey by the EY firm.
Holder of a stand on the Christmas market in Frankfurt, Nicole Eisermann observes that everything has become more expensive, between fresh cream, wine, electricity.
I’ll be careful but I have a lot of children and grandchildren who want presents, smiled one of the shoppers, Gnther Blum, further away.
Central banks more severe
Stronger but above all longer: central bankers in Europe and the United States, as well as most of their counterparts in the world, resumed the path of interest rate hikes and warned that they would continue the movement in 2023 .
In mid-December, the American Fed and the European ECB admittedly reduced the magnitude of their rate hikes. But they showed their determination to continue to fight long-term against well-established inflation.
This is not without risk: the strategy weighs down economic activity a little more by making borrowing conditions for households and businesses more expensive, fueling fears of recession.
Ditto for the States, more indebted since the financial crisis and the pandemic, and for some now threatened with instability or default of payment.
One symbol sums up the atmosphere of economic grimace soup: the S&P 500 index of the largest American stock market capitalizations is heading for its worst year since the financial crisis of 2008.
Recessions and a climate crisis on the horizon
The planet is still far from the generalized recession next year: the OECD still forecasts 2.2% growth and the IMF 2.7% – but it has warned in recent weeks that the chances of arriving at only 2% have increase
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The UK has already declared itself in recession, and many economists believe that Germany and Italy will follow next year.
In the euro zone, the rating agency S&P Global is expecting a particularly difficult first quarter and GDP stagnation over the year. A further deterioration in the outlook after those announced throughout 2022.
At the same time, the Chinese locomotive is running out of steam: a drop in the country’s growth prospects for 2022 and 2023 is now very likely, IMF Managing Director Kristalina Georvieva told AFP in mid-December, foreseeing some difficulties with the change of course of Beijing in the face of the Covid.
The end of the zero Covid policy will necessarily lead to an increase in the number of infections with consequences for the smooth running of the economy, she underlined.
But the worst crisis, which is taking place in slow motion, is the climate crisis, says Roel Beetsma.
Faced with the proliferation of disasters, ambitions remain too timid, like the COP27 which failed to set new targets for reducing greenhouse gas emissions.
The energy reconfiguration of Europe will take years, also warns S&P Global.
States’ difficulty in managing soaring energy prices has reflected their slow transition. If we don’t do enough, it will hit us on a scale never seen before, thinks Roel Beetsma.