We Expect an Earnings Recession in 2023 Our base case for 2023 is that Australia is likely to experience an earnings recession even if we do not suffer an economic recession. The reality is that the starting point for earnings is at a historically very high level.
Not everyone agrees the global economy is heading for a recession. Yet with growth expected to slip even lower after a sharp slowdown in 2022, it's a possibility. The International Monetary Fund projected in October that global growth will fall to 2.7% in 2023.
Many economists are predicting that the United States will likely tip into a mild recession in 2023. That means economic growth and the labor market would weaken, but a downturn could be relatively brief and not too painful.
You may lose your job during a recession, as unemployment levels rise. Not only are you more likely to lose your current job, it becomes much harder to find a job replacement since more people are out of work. People who keep their jobs may see cuts to pay and benefits, and struggle to negotiate future pay raises.
Deutsche Bank forecasts Australia will enter a recession in 2023, following an expected rise in unemployment.
'The IMF is now predicting Australia's economy in 2023 and 2024 will grow by less than 2% each year. When that has happened in the past, we have had a recession,' writes Greg Jericho. 'The IMF is now predicting Australia's economy in 2023 and 2024 will grow by less than 2% each year.
Any recession looks set to be mild, though our US GDP outlook of -0.2% and 0.9% for 2023 and 2024 is lower than consensus. Interest rates appear close to a peak – we estimate 5% – and are likely to remain at that level until 2024.
However, recessions have been much shorter since World War II, with the typical economic downturn lasting approximately 10 months in the U.S. They can be much longer than that -- the Great Recession of 2007-2009 lasted 18 months -- or very short -- the COVID-19 recession of 2020 only lasted two months.
As a result, six of the seven largest economies in the world are projected to be emerging economies in 2050 led by China (1st), India (2nd) and Indonesia (4th) The US could be down to third place in the global GDP rankings while the EU27's share of world GDP could fall below 10% by 2050.
How long and how bad is the average recession? A recent Forbes analysis showed the average period of economic growth lasted 3.2 years while the average recession lasted 1.5 years – an average of 4.7 years for the full cycle.
Global economy: slow growth ahead
With significant difference across countries, global growth is likely to slow down to +1.4% in 2023 and recover modestly to +2.8% in 2024. Advanced economies are heading toward a mild recession of -0.1% in 2023, followed by a rebound to below-potential growth of +1.5% in 2024.
"China will be unable to surpass the U.S. economically, even after 2036," JCER said, due to slower productivity gains coupled with labor shortages. The Communist Party of China has set two long-term targets for 2035 and the middle of this century in amendments to the constitution made in October.
According to the Social Progress Index, the US is facing "small but steady declines" in health and other matters and along with Brazil and Hungary was one of few nations to slide backwards on the index between 2010 and 2020.
In general, prices tend to fall during a recession. This is because people are buying less, and businesses are selling less. However, some items may become more expensive during a recession. For example, food and gas prices may increase if there's an increase in demand or a decrease in supply.
Economists see an overwhelming chance that the U.S. economy sinks into a recession next year as a result of the Federal Reserve's massive interest rate hikes. The probability of a downturn in 2023 climbed to 70% in December, according to the latest Bloomberg monthly survey of economists, up from 65% in November.
Global growth is projected to slow from 3% in 2022 to 2¼ percent in 2023, well below the pace foreseen prior to the war. In 2023, real global incomes could be around USD 2.8 trillion lower than expected a year ago (a shortfall of just over 2% of GDP in PPP terms).
By 2050, India is projected to be the world's second-largest economy (overtaking the United States) and will account for 15% of the world's total GDP. The positive outcomes of that growth have already started to make an impact for residents.
Other economists, and quite a few environmental experts, point out that economic growth cannot be sustainable in the long term. Actually, environmentalists state that the pace of economics growth we experienced in the last 100 years is already unsustainable.
It's one of the fastest moving plates if you look at it horizontally. It moves at around seven centimetres per year, she said. “But vertically there is a problem. Historical data suggests that it should be uplifting by about a millimetre per year, but the data that we've got suggests it's sinking.
The Australian Economy - September quarter 2022. Our economy grew 0.6 per cent during the September quarter 2022, and 5.9 per cent compared to last year. This was the fourth consecutive quarter of growth since the COVID-19 Delta variant lockdowns. Household consumption drove the increase, growing 1.1 per cent.
Australia's economic stability has translated to relatively high levels of average economic growth compared to other developed economies over the period. Australia has seen average annual economic growth of 3.3 per cent over the period from 1992 to 2017.
The United Nations says India will soon overtake China as the world's most populous country.