World Bank Halves Global Economic Growth + 11 Other Dire 2023 Predictions

Ask yourself when was the last time the likes of the World Bank or IMF etc revised their growth projections UP? In keeping with your likely answer, last night the World Bank yet again slashed its global economy forecast but this time by almost half!

The World Bank having previously forecast global economic growth in 2023 to be 3% last night slashed that to just 1.7% citing the biggest reductions in the world’s two biggest economies, China and the US.  In their words “Global growth has slowed to the extent that the global economy is perilously close to falling into recession”.  Outside of the 2009 GFC and 2020 COVID recessions, this is the lowest forecast in nearly 30 years and again we remind you, they almost always overstate the eventual reality.  To wit:

“The risks that we warned of six months ago have materialised and our worst-case scenario is now our baseline scenario…..The world’s economy is on a razor’s edge and could easily fall into recession if financial conditions tighten.”

Again too, they are screaming to the world’s central banks to not overtighten into this weakness.  Whilst the central banks tackle inflation objectives, emboldened by persistently strong job markets, the pleas are likely to continue to fall on deaf ears as they continue to stare down the barrel of stagflation so clearly depicted in the following chart:

The World Bank are increasingly concerned this relentless pursuit of hiking to kill what is a lagging indicator in inflation, emboldened by the lagging indicator that is employment (and always the last to reverse as recession grips) will lead to not just stagflation but broader impacts of a weak economy right now:

“Weakness in growth and business investment will compound the already devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change”

The World Bank are merely another authority sounding such warnings.  Analyst and author Michael Snyder recently compiled “11 Ominous Predictions for 2023” from some of the biggest names as follows:

#1 The IMF: “We expect one-third of the world economy to be in recession. Even countries that are not in recession, it would feel like recession for hundreds of millions of people”

#2 Bloomberg: “Economists say there is a 7-in-10 likelihood that the US economy will sink into a recession next year, slashing demand forecasts and trimming inflation projections in the wake of massive interest-rate hikes by the Federal Reserve.”

#3 The World Bank: “As central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging market and developing economies that would do them lasting harm, according to a comprehensive new study by the World Bank.”

#4 Bank of America CEO Brian Moynihan: “We’re going to have a shallow recession”

#5 Mohamed El-Erian: “Many ‘high-conviction’ U.S. recession calls are immediately coupled with the assertion that it’ll be ‘short and shallow.’ Reminds me of the behavioural trap ‘transitory inflation’ proponents fell into last year”

#6 Nouriel Roubini: “No, this is not going to be a short and shallow recession, it’s going to be deep and protracted”

#7 Larry Summers: “My sense is that it’s much harder than many people think to achieve a soft landing”

#8 Goldman Sachs CEO David Solomon: “Economic growth is slowing,” Goldman Sachs CEO David Solomon said at the same conference. “When I talk to our clients, they sound extremely cautious.”

#9 Charles Schwab & Co.’s Liz Ann Sonders: “We have to take our medicine still, meaning a weaker economy and a weaker labor market. The question is, is it better to take our medicine sooner or later?”

#10 BlackRock: “Central bankers won’t ride to the rescue when growth slows in this new regime, contrary to what investors have come to expect. They are deliberately causing recessions by overtightening policy to try to rein in inflation”

#11 Michael Burry: “Inflation peaked. But it is not the last peak of this cycle. We are likely to see CPI lower, possibly negative in 2H 2023, and the US in recession by any definition. Fed will cut and government will stimulate. And we will have another inflation spike. It’s not hard.”

That said, Snyder sees worse ahead:

“If the worst of these forecasts turn out to be accurate, that will actually be incredibly good news.

Because the reality of what we will be facing in 2023 is likely to be significantly worse than any of these experts are currently projecting.”

Not surprisingly spot gold has relentlessly climbed since bottoming last November when this all became increasingly clear, rallying from USD1640 to the current USD1877 and most analysts bullish for further gold gains in 2023.  USD1900 is the ‘line in the sand’ to keep a close eye on.  From The Market Ear:

“Unstoppable gold

Gold has actually traded in a range since 2020, with a few over/undershoots. We are approaching the huge 1900 level, that has been a key level over the years, but we have to admit momentum is impressive. Note the 50 day about to cross the 200 day as well.”

************************************************************************************

GOT A QUESTION about today's news?

This afternoon, the Gold & Silver Standard Insights team will be breaking down the news and answering YOUR questions.

Submit your question to [email protected] and SUBSCRIBE to the YouTube Channel to be notified when the GSS Insights video is live.

**********************************************************************************