The economic storm has taken hold in the world economy, and the countries in Europe, in particular, will be left behind as losers in 2023.
This is the conclusion of a new forecast from the Organization for Economic Co-operation and Development (OECD), which works to promote sustainable economic growth globally.
Marginal progress
The organization expects that the Danish economy will achieve marginal progress of 0.1 per cent next year. This is 1.3 percentage points lower than was predicted in June.
Tore Stramer, chief economist at the business organization Dansk Erhverv, calls it “a slightly optimistic forecast” that the Danish economy is expected to emerge from 2023 with growth, even if it is only modest.
He is also supported by the national bank, whose latest forecast from September predicted a negative growth of 0.1 per cent next year.
Continued pressure on the labour market
– OECD pointerer dertil, at vækstopbremsningen i dansk økonomi sker på et tidspunkt, hvor presset på arbejdsmarkedet fortsat er stort, skriver Tore Stramer i en kommentar.
Therefore, the OECD also recommends tight fiscal policy and that further tightening should be considered if inflationary pressure takes hold.
Improvement in 2024
In 2024, both the world economy and the Danish economy are expected to show signs of improvement. This is evident from the forecast.
In September, the organization came up with a preliminary forecast for the world economy. It pointed in the direction of overall growth of approximately 2.2 per cent for next year. That prediction is more or less maintained.
– It is, of course, positive that growth expectations have not worsened further since September, writes Tore Stramer.
– This shows that, after all, the world economy has not been hit by new serious shocks over recent months.
War and interest rate hikes weigh heavily
In the big picture, the world economy is weighed down by Ukraine’s war, which has skyrocketed consumer prices.
At the same time, the central banks are trying to limit the desire to spend by raising interest rates to towering levels.
If it is up to Allan Sørensen, chief economist at the business organization Dansk Industri, fighting inflation should be a top political priority going forward.
Inflation will slow down in 2023
– Inflation will decrease in 2023 but will remain high. The fight against inflation requires more interest rate increases, while the fiscal policy does not push it any further, he says in a comment.
The OECD emphasizes in the forecast that the expectations for the world economy come with a great deal of uncertainty. But the risk of a more significant economic setback has also increased. – The risk comes primarily from the uncertainty surrounding the energy supply, particularly in Europe, over the next two winters. In addition, there is a risk that the tightening of monetary policy will slow down growth in the world economy more than expected, writes Tore Stramer.
