Economists from the Organization of Petroleum Exporting Countries painted a mixed picture of the global economy after leaving many of their growth estimates unchanged from previous estimates. File photo by Mohamed Messara/EPA-EFE
Chinese President Xi Jinping takes his oath during the third plenary session of the National People’s Congress (NPC) March 10 at the Great Hall of the People in Beijing. China is likely to account for much of global economic growth this year, OPEC economists said. File photo by Mark R. Cristino/Pool/EPA-EFE
March 14 (UPI) — Risks remain, although economists from the Organization of Petroleum Exporting Countries gave a mixed assessment of the health of the global economy and flooded their monthly market report with reservations about central bank policies and geopolitical uncertainties.
In its monthly market report, OPEC looked back at 2022 and slightly revised up its estimate for global growth on the back of gains recorded in the second half of the year. Looking ahead, however, economists left their forecast for growth in 2023 unchanged at 2.6%, down from last year’s 3.2% growth.
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In the US economy, OPEC left its estimates unchanged for 2022 and 2023 at 2.1% and 1.2%, respectively. Citing consumer confidence, OPEC said December-January readings are slightly above pre-pandemic levels despite softening sentiment.
Nevertheless, OPEC sees confidence in the US economy at a “healthy level”.
On Tuesday, the US Commerce Department reported that consumer-level inflation rose 6% in the 12 months to February, well below levels of just under 9% in the summer.
Consumer-level inflation remains well above the Federal Reserve’s target rate of 2%, although President Joe Biden said policymakers would address inflation “from a position of strength.”
“The US economy is expected to perform relatively well in 2023, albeit below the 2.1% growth level in 2022,” OPEC economists wrote. “The relatively high interest rate level and the tight labor market are the main factors slowing down high growth rates in the current year.”
The US Federal Reserve meets next week to consider its next steps to tackle consumer inflation.
In China, the world’s second largest economy, OPEC posted 3% growth last year and expects 5.2% growth in 2023, just below the 5% growth target set by the Chinese government.
China is recovering from severe pandemic-related restrictions this year, and OPEC said its reopening “will provide significant impetus to global economic growth.”
That forecast was clouded by China’s past reliance on exports to fuel its economy’s growth. OPEC noted that exports fell 6.8% during the 12-month period ended January, compared to an 8.7% decline for the year to November.
“Given the increasing tensions in world trade, it remains to be seen how this area will develop in the future,” said OPEC.
Some of these tensions may be related to the policies of the US Inflation Reduction Act, which prioritizes a “made-in-America” economy, particularly for electric vehicles, where China is a leader.
Globally, OPEC appeared to be hedging its bets on future growth. China’s recovery, which is outperforming other economies, should keep consumer-level inflation high, but rising interest rates could curb any major month.
Because of this, OPEC said that “downside risks remain and will need to be carefully monitored in the coming months.”
Markets were mixed early Tuesday after reeling from the recent banking collapses in the US economy. Crude oil prices were on the decline despite all major US indices being in positive territory.
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