OPEC economists forecast gloomy 2023

Jan. 17 (UPI) -- Economists at the Organization of the Petroleum Exporting Countries on Tuesday joined the growing chorus of voices pointing to a slowdown in the global economy for 2023.

"Multiple economic indicators point to a relative slowdown in global economic growth for 2023," OPEC economists wrote in their monthly report for January.

Global economic policymakers spent much of last year hiking their lending rates in an effort to cool inflation, though those policies could be aggressive enough to usher in a worldwide contraction.

Kristalina Georgieva, the director of the International Monetary Fund, said during the first weekend of January that one-third of the world's economy could be in recession this year, with Europe expected to suffer the worst.

The World Bank followed suit last week, saying it expected the global economy to expand by 1.7% this year, down from its forecast for 3% growth from just six months ago.

"Given fragile economic conditions, any new adverse development -- such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions -- could push the global economy into recession," the World Bank warned.

OPEC is not quite that pessimistic, putting global growth at 2.5% for this year, though that marks a half-percent slowdown from 2022. Economists at OPEC expect the European economy to expand only by 0.4% this year, a slowdown from 3.2% for 2022. Russia, which is seeing dwindling revenues from Western sanctions targeting its oil and gas, should see a 0.5% contraction, compared with negative 4% last year.

Growth in the United States, the world's largest economy, is expected at 1% this year, down from 2% last year. China, second after the United States, expands by 5.6% this year. Beijing on Tuesday reported only 3% growth for 2022, its slowest pace since the 1970s.

A strict, zero-tolerance approach to the pandemic stifled China's economy for much of last year, though that policy has since been relaxed.

For OPEC, both the U.S. and Chinese economies are expected to be the standouts in what could otherwise be a lackluster year.

"Although growth momentum is expected to carry over into 2023, the world economy will continue navigating through many challenges, amid high inflation, monetary tightening by major central banks, and high sovereign debt levels in many regions," economists wrote. "Moreover, geopolitical and COVID-19 related risks and uncertainties may add to the downside risk in a few selected economies."