Citi expects global growth to slow below 2% in 2023

Citigroup on Wednesday forecast global growth to slow to below 2 percent next year, echoing similar projections by major financial institutions such as Goldman Sachs, Barclays, and J.P. Morgan.

Strategists at the brokerage cited continued challenges from the COVID-19 pandemic and the Russia-Ukraine war — which skyrocketed inflation to decades-high levels and triggered aggressive policy tightening — as reasons behind the outlook.

“We see global performance as likely (being) plagued by ‘rolling’ country-level recessions through the year ahead,” said Citi strategists, led by Nathan Sheets.

While the Wall-Street investment bank expects the U.S. economy to grow 1.9 percent this year, it is seen more than halving to 0.7 percent in 2023.

It expects year-on-year U.S. inflation at 4.1 percent next year, with the U.S. Federal Reserve’s terminal rate seen between 5.25 percent and 5.5 percent.

Among other geographies, Citi sees the UK and euro area falling into recession by the end of this year, as both economies face the heat of energy constraints on supply and demand front, along with tighter monetary and fiscal policies.

For 2023, Citi projects UK and euro area to contract 1.5 percent and 0.4 percent, respectively.

In China, the brokerage expects the government to soften its zero-COVID policy, which is seen driving a 5.6% growth in gross domestic product next year.

Emerging markets, meanwhile, are seen growing 3.7 percent, with India’s 5.7 percent growth — slower than this year’s 6.7 percentprediction — seen leading among major economies.