GLOBAL ECONOMY: United States, Brazil, Russia experience economic growth in H1’23
By Eyo Nsima
The United States, Brazil and Russia experienced economic growth that surpassed initial expectations in the first half of 2023, according to the Organisation of Petroleum Exporting Countries, OPEC.
In its August 2023 Monthly Oil Market Report, MOMR, the organization, stated: “The United States, Brazil and Russia experienced economic growth that surpassed initial expectations in 1H23.
The pattern of sound growth in India seems to have a solid foundation as well. And while China appears to face selective challenges currently, the prospect of counterbalancing measures by the government will likely support the economy to achieve this year’s growth target.
“In contrast, the Euro-zone witnessed somewhat lower-than-expected growth in 1H23, mainly due to a decline in the industrial sector, due to a contraction in the German economy. Taking into account these mainly positive factors, the global GDP growth projection for 2023 was revised slightly to stand at 2.7%.
Indeed, some signs have emerged that slowing inflation and the possibility of a consequently more accommodative monetary policy, ongoing robust private household consumption and stable commodity prices may lead 2024 growth to be slightly higher than previously expected.
“Latin American central banks, notably the central bank of Brazil (BCB), were early in adopting relatively aggressive monetary tightening in order to fight spiraling inflation. With the region’s normalising inflation level, the BCB, along with the central bank of Chile, has now started to considerably lower key policy rates.
Not only could this offer some guidance for advanced economies’ central bank monetary policies, but it is also likely to provide support for the region’s growth in 2H23 and even more so in 2024. In addition, Russia’s progress in overcoming its economic challenges in 2023 is likely to lead to higher growth in 2024 as well.
“These effects have led to a slight upward revision in 2024 global GDP growth to 2.6%. Despite the latest positive developments, several uncertainties regarding economic growth in 2H23 and 2024 require cautious monitoring. These include ongoing high inflation, the possibility of further monetary tightening, particularly in the US, the Euro-zone and the UK, despite already elevated key interest rates, and the challenge of tight labour markets in advanced economies.
“Moreover, it is still unclear how and when the geopolitical conflict in Eastern Europe might be resolved. In light of high global interest rates, sovereign debt is a rising concern as well, as it is at a record high in many economies. Upside potential may come from less-accentuated inflation, providing central banks with room for accommodative monetary policies towards the end of the year.
“Emerging Asia, particularly India, but also Brazil and Russia, could further surprise to the upside, with domestic demand and external trade accelerating. An even stronger-than-anticipated growth trend in China, supported by further fiscal and monetary stimulus, may provide additional support to global economic growth this year. Moreover, if the US continues to keep its 1H23 momentum, growth could turn out to be higher than expected.”
