Global growth could slump to 2009 levels next year as the war between Russia, and Ukraine continues to wreak havoc on the world economy, according to the Institute of International Finance.
Economists including Robin Brooks and Jonathan Fortun said on Thursday that growth was likely to decline to just 1.2% in 2023 as what they called the “forever war” drags on, Bloomberg first reported.
Brooks and Fortun see the current conflict, which has caused severe volatility into stock markets and sparked price surges for commodities from crude oil to wheat, to suppress economic growth for all of next year.
“The severity of the coming hit to global GDP depends principally on the trajectory of the war in Ukraine,” they wrote in a research note. “Our base case is that fighting drags on into 2024, given that the conflict is ‘existential’ for Putin.”
The eurozone economy is likely to shrink by 2% as business confidence declines due to Europe’s proximity to Russia and Ukraine, according to the IIF.
Meanwhile, Latin America is likely to prove a “positive standout” – and the continent’s economy could expand by 1.2% next year, the trade body said.