The world faces the risk of recession in 2023 as higher interest rates cause some economies to contract, according to the Center for Economic and Business Research (CEBR).
Citing the British consultancy's annual World Economic League Table, the global economy will surpass the $100 trillion mark for the first time in 2022 but it is expected to stagnate next year as policymakers continue to fight inflation.
This is reinforced by the statement from the director of CEBR, Kay Daniel Neufeld that the world economy will experience a downturn next year due to the increase in interest rates.
The report added that the battle against inflation has yet to be won and it expects central banks to maintain their hawkish stance in 2023 despite the economic slowdown.
The cost of bringing inflation down to an appropriate level is the prospect of worse growth in the next few years.
Compared to the latest forecasts of the International Monetary Fund (IMF), the findings are pessimistic.
The IMF issued a warning in October that more than a third of the world's economy will contract and there is a 25% chance that in 2023 (global GDP expanding by less than 2%), there will be a recession.
Even so, by 2037, the world's gross domestic product will double as developing economies catch up with wealthier nations.
CEBR projects that the East Asia and Pacific region will account for more than a third of global output, while Europe's contribution will fall to less than a fifth due to changing power dynamics.
The institution takes its basic data from the IMF's World Economic Survey and uses internal models to forecast growth, inflation and exchange rates.
