By: ADMIN |
2023-03-10 00:09:15
Did you hear about the US inflation report? The September consumer-price-index came at 0.4%, higher than expected, though the annual inflation fell to 8.2% from August’s 8.5%. US fed will meet in early November and another 0.75% rate rise is now a foregone conclusion, taking the fed-rate to 3.75%. Another rate rises of at least 0.5% is also on the cards. However, some economists admit that the aggressive rate rises have failed to bring down the inflation. The strategy has been counterproductive and increased economic difficulties.
IMF, in its Global Growth Forecast report says that the 2022 growth is unchanged at 3.2 percent. The projection for next year is lowered to 2.7 percent. This is a good 0.2 percentage points lower than was forecast in the July report. The 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies, the United States, China, and the euro area will continue to stall. Overall, this year’s shocks will re-open economic wounds that were only partially healed post-pandemic. US will grow at 1%, EU at 0.5%, GCC at 4.1% and China at 4.5%.
The most stable in this scenario seem to the commodity exporting countries of GCC. The US Energy Information Administration revised down the price of Brent crude for 2022 to an average of $102.09 per barrel and American benchmark West Texas Intermediate (WTI) to $95.74 a barrel in 2022. In the report last month, these figures were $104.21 and $98.07, respectively. For next year, the Agency expects the price of Brent crude to average $94.58 per barrel, and WTI to average $88.58 per barrel. These figures are well above the range the GCC economies need to balance their budgets. This is the primary reason why recession may not hit these economies.
2024 could be a completely different picture. As per ING, the surging national debt will exacerbate Washington’s challenges. As the US economy enters the recession next year, consumer spending and business capital expenditure is set to fall, while unemployment is likely to rise. Mounting concerns about growth and the housing market are likely to lead to rate cuts from the third quarter of 2023. The cycle could then turn and we here in Dubai would have ridden out the storm.
