A decade of sluggish growth predicted for the world economy
Tressis Gestion expert Lacalle predicted a decade of sluggish economic growth for the world
A decade of sluggish growth awaits the world economy, and developed countries will be lucky if they can achieve even a one percent annual rise in their economies, Tressis Gestion chief economist Daniel Lacalle predicted on CNBC's "Squawk Box Europe."
"I think we're now experiencing the consequences in the form of a negative reaction to those massive stimulus packages that governments implemented in 2020 and 2021. These have not delivered the potential growth that many economists were expecting," the expert said.
A recovery in China, where the situation now looks bleak, can help stabilize the global economy, and this is most painful for Latin America and Africa. It is China's full economic recovery that will be the biggest positive for world markets next year. And also, according to Lacalle, it is very important that it will help, for example, German and French exporters, who have felt the effects of lockdowns and profit problems in China.
Nevertheless, such a scenario would still not bring the world any closer to the kind of economic growth seen in the year before the pandemic in 2019. In addition to problems with GDP growth, the world will have to live with elevated inflation. However, despite the slow pace of economies, the world will not face a new economic crisis, Lacalle predicted.
On November 14, the International Monetary Fund (IMF) issued another forecast in which it assessed the prospects of the world economy as gloomy. According to the forecast, its growth next year will be only 2.7 percent, although back in July an increase of 3.8 percent was expected. Experts believed that many countries will need further tightening of fiscal and monetary policy to reduce inflation and eliminate debt vulnerabilities.