(Reuters) - Barclays (LON:BARC) economists on Wednesday cut their global economic growth forecast for 2023 as inflation is seen unlikely to fall quickly, forcing monetary policy to be 'restrictive'.
The brokerage warned that 2023 looks set to be one of the weakest in four decades with advanced economies likely heading into a recession.
They now forecast global growth at 1.7% on a year-on-year basis, compared to September's forecast of 2.2%. For this year, Barclays sees a 3.2% growth.
"With the exception of housing, where activity has taken a big hit, especially in the U.S., policy tightening has not had enough chance to affect large parts of the economy," the brokerage said.
"That will change next year."
Recession fears have gripped investors as central banks globally have been rapidly tightening monetary policies to keep soaring inflation, exacerbated by the Russia-Ukraine war, in check.
A deepening energy crisis in Europe and continued lockdowns in China have also added to the global economic woes.
Barclays expects developed economies to contract across 2023, with recessions in the UK and Euro area starting in the third and fourth quarter of 2022 respectively.
For the U.S., the brokerage sees a longer recession that will see gross domestic product decline by 0.1% in 2023.
It forecasts below-consensus growth of 3.8% for China, given a slow move away from zero-COVID policies, rising infections, and a sluggish property sector.
The brokerage said India should be one of the biggest contributors to world growth next year, but it is not a large enough economy to change the global outlook. It expects India to grow over 5% on a year-on-year basis in 2023.