Next Year’s Global and Domestic Economic Growth Expected to Slow... BNK Economic Research Institute Releases Report on ‘G2 Economic Status and Regional Economic Implications’

BNK Financial Group CI.

[Asia Economy Yeongnam Reporting Headquarters Reporter Hwang Duyul] BNK Economic Research Institute, affiliated with BNK Financial Group, announced a research report titled ‘G2 Economic Status and Regional Economic Implications’ on the 3rd.

According to the report, the United States is experiencing a slowdown in growth due to high inflation and strong monetary tightening policies.

This year, the U.S. consumer price inflation rate surged to 8.3%, nearly double last year’s 4.7%, and the benchmark interest rate rose from 0.25% in February to 4.0% in November.

Accordingly, the U.S. economic growth rate recorded negative growth for two consecutive quarters, with -1.6% in the first quarter and -0.6% in the second quarter.

Although it slightly rebounded to 2.6% in the third quarter, downward pressure on the economy increased as the leading economic index declined for six consecutive months, leading some to raise the possibility of a recession.

Volatility in the U.S. financial markets is also increasing. The Dow Jones and Nasdaq indices fell by 9.9% and 29.8%, respectively, from January to October this year, while the dollar index rose to 111.6 points at the end of October.

In particular, in September this year, the yield on the 2-year U.S. Treasury note was 45 basis points higher than the 10-year yield, a yield curve inversion interpreted as a precursor to an economic recession.

The U.S. economic growth rate is also expected to decline next year. Major institutions foresee that the U.S. economy will record a growth rate below 1% due to continued high inflation and high interest rates.

China’s economy has also weakened this year. The growth in exports has significantly slowed due to U.S.-China conflicts and global economic slowdown, while the domestic sector has been sluggish due to policies such as zero-COVID.

Real estate downturns and local government debt have also emerged as major downside risks to growth.

Housing prices have seen an expanded decline, and market uncertainty has increased due to mortgage repayment defaults and real estate developers’ debt defaults. Local governments face growing fiscal crisis concerns due to reduced land sale revenues, increased debt, and rising interest burdens.

China’s economic growth rate for 2023 is expected to rebound to the mid-4% range but remain weak.

Although growth is expected to improve compared to this year due to the Chinese government’s active market stabilization policies, major risks such as U.S.-China conflicts and real estate market downturns are unlikely to be resolved.

BNK Economic Research Institute forecasted that the global economy and domestic economy will experience sluggish growth next year as the economic downturn of the G2, which accounts for 42.4% of global GDP and 23.2% of import demand, continues.

They also expected that uncertainties such as major countries’ monetary tightening, U.S.-China conflicts, and the Russia-Ukraine war will increase downward pressure on growth.

Jung Young-doo, head of BNK Economic Research Institute, said, “The Southeast region’s economy, which is highly dependent on external factors, is expected to face many difficulties next year due to the economic recessions in the G2 and major countries. We must actively respond to the increased volatility in financial markets while continuously striving to improve trade structure and product competitiveness.”

This content was produced with the assistance of AI translation services.