Barclays predicts fourth-quarter contraction for major economies

Barclays predicts global growth will slow to 2.2% in 2023 from 2.8% this year, and warns that it expects advanced economies to contract in the fourth quarter and reach zero growth next year. In 2021, global growth is projected to be 6.3%.

Following the conflict between Russia and Ukraine, which has exacerbated supply chain problems, central banks around the world have quickly tightened monetary policies to control rising inflation while economies recover from the pandemic.

A slowdown in global growth will bring the world “closer to a global recession,” according to Barclays, and the bad news is behind us.

“These are grim economic prospects. But it could have been worse. There’s a line between gloom and doom, and we think that’s the global economy.”

Indicators are giving mixed signals about the strength of the U.S. economy in light of the Fed’s tightening cycle, the broker said, adding that the U.S. will “barely” avoid an outright recession next year.

Barclays expects a slowdown in Europe in the first half of 2023 and China will see a slight pick-up in GDP growth in the fourth quarter, below its target of 5.5%, the broker also predicts for the country’s GDP growth. The country has cut it by 80 basis points to 4.5% before 2023.