The World Bank Warns About Slowing Growth

Those who have invested or traded during 2022 know how challenging the year was. We witnessed a war in Europe, high levels of inflation, a gradual return to high-interest rates, and a decline in the prices of stocks. Despite this, things seem to be slightly improving in the last few weeks, although it is too early to be very optimistic.

The world bank gives out a grim forecast

According to the World Bank, global growth abruptly slowed to 3.2 percent in 2022. The bank expects the growth rate to slow further to 2.7% in 2023, and those projections are not final, as the bank has noted that it might downgrade its forecasts. All in all, there remains a lot of uncertainty ahead.

The Fed expects to slow down its rate hikes pace soon

On a more positive note, Federal Reserve Board Governor Lael Brainard said that the Federal Reserve will likely soon slow its interest rate hikes in the US. This does not necessarily mean that the rate hikes will stop altogether, but that they will happen at a slower pace. The stock markets have already priced in future rate hikes, and thus the impact of additional hikes will likely be limited. Several investment managers expect stocks to be among the gainers in 2023, and you can trade stock CFDs with a reliable broker like easymarkets.com, as this will enable you to buy or sell those stocks, depending on your view of the market.

Inflation is slowing down

A positive indicator which points in that direction is the Producer Price Index has risen faster than expected in November. It rose by 0.3% from October, more than the 0.2% expected, and October’s number was also revised up to 0.3% from 0.2%. The headline annual PPI was +7.4% which is higher than the +7.2% year-on-year expected. Even though this means inflation is still high, there is a general trend of falling prices in many sectors.

This follows a slight decline in the consumer price index in the US, which has also declined slightly from previous prints. The index was still high at above 7%, but it is better than the previous higher 8% inflation levels.

China still faces problems

Recent protests in China have prompted the Chinese communist party to ease its lockdown measures. People have grown tired of the zero covid policy imposed by the government and wanted to break free of the restrictions. Even though the government had no choice but to listen to people’s demands, the Chinese economy still faces problems. Things do not look very promising for the second largest economy in the world.

Conclusion

2022 was a year full of challenges, fluctuations, and geopolitical stresses. This led to a cost-of-living crisis and slowed down global growth. Things seem to be gradually improving, but inflation might take longer than expected to cool down. Until then, it is better to manage risk well, and not take excessively risky positions.