Economists at the Organization of the Petroleum Exporting Countries said they expect the global economy to suffer some pain during the fourth quarter of the year. Its estimate for global crude oil demand was revised lower from the prior month. File photo by Mohamed Messara/EPA-EFE
Nov. 14 (UPI) -- While growth has been better than anticipated from the world's leading economies, a global slowdown is expected to develop during the last few months of the year, OPEC economists said Monday.
The Organization of the Petroleum Exporting Countries released its monthly market report for November on Monday, before the start of the trading day on Wall Street. OPEC economists left all of their forecasts for economic growth in place for this year and next, but said it would be anything but smooth sailing.
"The world economy has entered a period of significant uncertainty and rising challenges in the fourth quarter," economists wrote. "Downside risks include high inflation, monetary tightening by major central banks, high sovereign debt levels in many regions, tightening labor markets and persisting supply chain constraints."
Last week's reading on U.S. inflation came in better than expected, with so-called core inflation -- which strips out volatile items such as food and energy -- at 6.3% during the 12-month period ending in October. Month-on-month and core inflation increased 0.3% from September, better than the 0.6% increase during the prior period.
OPEC economists said that even though some economies were performing better than others, "a gradual slowdown is expected to materialize" during the fourth quarter. As such, economists kept global growth forecasts unchanged for both this year and the next.
The global economy is expected to expand by 2.7% this year and by 2.5% in 2023. The United States, the world's largest economy in the world, should grow by 1.5% this year and slow to 0.8% by next year. China's economy expands by 3.1% this year and grows another 4.8% next year, the only major economy expecting an expansion over 2022 levels.
Among the major economies reported on by OPEC economists, only Russia is on pace for a contraction this year. OPEC expects negative 5.7% growth for 2022 and a recovery to 0.2% next year.
Russia's revenue is quickly evaporating due to Western sanctions imposed in response to its war on Ukraine. By next month, European buyers will no longer purchase waterborne crude oil from Russia.
That could lead to some supply-side challenges in the future. The OPEC forecast for producers working outside of its umbrella was unchanged at 1.5 million barrels per day in new output next year. OPEC's own production is on pace to post only a very minor increase by next year.
But given the myriad of concerns from OPEC economists, global demand for crude oil next year was revised lower from the previous month's forecast by 100,000 bpd to stand at 2.5 million bpd.