UK growth forecast to be one of the worst for advanced economies
Leading trade credit insurer, Atradius, has published its latest Economic Outlook report analysing the performance of global markets.
The quarterly report reviews growth within the global economy and identifies factors that could potentially impact future performance.
In its latest Economic Outlook report, Atradius cites the war in Ukraine, lingering lockdown restrictions and multi-decade high inflation as factors that are continuing to negatively impact the global economy.
At a global level, Atradius warns that GDP is expected to decrease through to 2023 as inflation restricts consumer spending and supply-chain issues limit trade. Despite global GDP recovering to 5.9% in 2021, growth is predicted to decrease to 3.1% in 2022 and slow to a further 3.0% by 2023.
The same story applies among the advanced economies, where GDP growth is expected to slow to 2.7% in 2022 and 2.1% in 2023. Surging inflation driven by Europe’s high energy prices and supply-demand imbalances in the US are both cited as key factors.
Meanwhile, in the UK, growth forecasts paint an even bleaker picture. Atradius predicts the UK’s growth to be 3.6% in 2022, followed by 1.3% in 2023, making it one of the worst performing advanced economies. According to the report, pressure on British households is at an all-time high, with real household incomes expected to fall by 2.2% in 2022, the largest decrease since records began in 1955.
In addition to high inflation, net exports continue to drag on GDP growth in the UK. Atradius reflects on the terms of trade which have been dropping consistently since Brexit; and though net exports are expected to gradually improve in the UK for 2023, newfound tensions between the UK and the EU could put this recovery at risk.
Finally, Atradius’ GDP growth predictions for emerging market economies (EMEs) are the least promising. Forecast to be nearly halved in 2022 to 3.5%, down from 6.9% in 2021, Atradius reiterates the pressure of supply-chain bottlenecks and inflation on these particular countries, as well as the even greater risk of new COVID outbreaks due to lower vaccination rates.
James Burgess, Head of Commercial at Atradius UK & Ireland, said: “Global recovery from the pandemic is set to be a gradual one thanks to a new set of adverse shocks. After a relatively healthy start to 2022, Russia’s invasion of Ukraine and the subsequent sanctions have quickly stunted growth. Ongoing supply bottlenecks, geopolitical turmoil in Eastern Europe, and rampant inflation continue to mount, making it incredibly difficult for any global country to plan ahead and navigate a safe and steady future.
“Businesses wanting to survive 2022/23 must keep an eye on the economic performance of all global markets, and the easiest way to do this is by investing in trade credit insurance. At Atradius, our doors are always open, and our expert underwriters can help to assess each customer’s payment practices to establish key risks and opportunities. Access to robust business intelligence and expert insight into market performance is key and can help businesses mitigate risk and build solid foundations for international trade.”