IIF: 2023 will be the worst year for the world economy since the 2009 crisis

The Institute of International Finance (IIF) said the world economy will have a year in 2023 almost as weak as 2009.

The Washington-based IIF said the conflict in Ukraine risks “eternal war” and this will have major implications for the world economy.

LESS GROWTH AFTER 2009

In a note published yesterday by IIF economists led by IIF Chief Economist Robin Brooks and Jonathan Fortun, global growth is forecast to slow to 1.2% in 2023. Adjusted for base effects, this figure marked growth lowest the world economy has seen since 2009.

The IIF cited the war between Russia and Ukraine as the main risk in the global economy. “The severity of the impending blow to the global economy depends primarily on the course of the war in Ukraine,” the analysts wrote in the note. Considering that the conflict is ‘existential’ for Putin, our main thesis is that the conflict will last until 2024.

A NIGHTMARE SCENARIO FOR THE EUROPEAN ECONOMY

According to the IIF, the slowdown will be led by Europe, the most affected by the war. The eurozone economy will contract by 2 percent after sharp falls in consumer and business confidence.

IIF expects gross domestic product to rise 1 percent in the US, while forecasting 1.2 percent growth for Latin America. According to the IIF, the biggest driver of the global economy next year will be China, where covid restrictions are likely to be relaxed.

PREDICTIONS ATTRACT ATTENTION

IIF Chief Economist Brooks drew attention to the fact that his predictions for the euro/dollar parity would even out early this year.

Brooks also became very popular on social media when his prediction of a rally in the Brazilian real took off. Brooks also stands out with his ‘fair value estimates’ for the dollar/TL from time to time.