The International Monetary Fund (IMF) has revised its forecast for global economic growth in 2023 upwards from 2.7% to 2.9%.
The change seems to be more symbolic than anything else, but what matters most is the dynamic and how these changes affect investors’ moods. Since moods can impact investment decisions, and investment leads to growth, the change could have a ripple effect.
The IMF does not currently anticipate a recession in Europe. However, it appears that only Putin, Medvedev, and their allies continue to hope for one, in the vein of Orban. At the same time, they are also hoping that Europe will freeze over, so they have a double dose of “joy” to look forward to. Pavel’s victory in the Czech Republic shows that the bet that inflation will bring pro-Russian populists to power does not seem to be panning out.
In 2023, the UK’s GDP is expected to fall by 0.6%. This is a clear example of the negative impact that populism can have, even in developed economies with functioning institutions.
First, the Brexit hit, which largely determined the current weakness of the British economy. Then, the plans to “abolish taxes – increase spending – reduce tariffs” were thrown back.
Referendums are often seen as a way for the public to have a direct say on important issues. However, they can be very dangerous, especially when it comes to complex issues that are best left to democratic institutions. In the case of Brexit, the British public was swayed by emotional rhetoric, resulting in an economic crisis and a drop in living standards. Now that the public has changed its mind, it is too late to reverse the decision.
It is good that there are no pro-Russian populists in Britain, as this would prevent the future defeat of the conservatives, who are seen as Putin’s friends.
What can be scary here is the prospect of higher oil prices, which would have a negative impact on the Russian economy. Putin has been able to increase sales volumes, but at the expense of quality, and the fall in budget revenues is largely due to lower prices for oil. If oil prices were to increase, it would mean a sharper decline in the Russian economy.
The recent optimistic forecast for the global economy does not mean that all risks are gone. Namely, the fight against inflation has created risks in the form of rising rates. So far, inflation has been controlled and the world economy has not been overwhelmed. However, there have been no bursting bubbles in the stock market as of yet.
