Britain and the eurozone are likely to go into recession next year, according to Morgan Stanley, but the United States may well avoid it thanks to a strong labor market.

At the same time, China’s expected reopening after nearly three years of COVID-19 restrictions should boost its own economy and other emerging markets in Asia, investment bank analysts said in a series of reports on Sunday.

“Risks are to the downside,” said the report, which forecast global economic growth of 2.2 percent next year, lower than the International Monetary Fund’s latest estimate of 2.7 percent growth.

For next year, Morgan Stanley predicts a sharp gap between advanced economies “in recession or close to recession,” while emerging economies will “recover modestly,” but believes a global recovery is likely to remain elusive.

China’s economy is forecast to grow by 5% in 2023, beating the 3.7% average growth expected for emerging markets, while the G10 average was forecast to grow at just 0.3%.

Central banks around the world have raised interest rates this year to curb rampant inflation, and for the United States, Morgan Stanley predicted the Federal Reserve will keep interest rates high in 2023 as inflation remains high after peaking in the fourth quarter of this year. .

“The U.S. economy will narrowly avoid a recession in 2023, but the landing will not be so easy as job growth slows significantly and the unemployment rate continues to rise,” said the report, which forecasts growth of 0.5% next year.

“The cumulative effect of restrictive policies in 2023 will also be felt in 2024, leading to two very weak years,” the report added.

In addition, globally, inflation is set to peak in the current quarter, analysts say, “with disinflation dominating next year.”

(article photo: Waingro | Dreamstime.com)