Global economic growth is forecast to barely clear two per cent this year, according to a Reuters poll of economists who said the greater risk was a further downgrade to their view, at odds with widespread optimism in markets since the start of the year. Falling energy prices, a slowdown in inflation in most economies from multi-decade highs, an unexpectedly resilient euro zone economy and China’s economic reopening have led traders to speculate the downturn will be more mild.
That has driven MSCI’s all-country world index of sharesupnearly20percent from October lows, hitting a five-month closing high on Wednesday, despite the greater risk central banks keep interest rates higher for longer rather than cut them. But economists as a whole were much less upbeat, paring back growth forecasts for this year and next from 2.3 per cent and 3.0 per cent, respectively, in an October 2022 poll to 2.1 per cent and 2.8 per cent. Theirmoredourmoodflew in the face of some notable upgradesbybanksinrecent weeks. However, some of Wall Street’s biggest names have throwncoldwateronexpectations the U.S. economy will scrape through 2023 without a recession.