New data on its magnitude and proximity. More pressure on the working class and a higher level of destruction-devaluation of capitals
Let’s look at figures from international organizations of big capital and bourgeois analysts
1) The IMF warns: one-third of the world economy will fall into recession in 2023
One-third of the world economy will be hit by recession this year, IMF managing director Kristalina Georgieva said on Sunday, warning that the world faces a “tougher” year in 2023 than in 2022.
“The US, China and the eurozone are slowing simultaneously. Half of the European Union will be in recession and over the next few months, China’s growth will be negative and its impact on the region and on global growth will be negative,” Georgieva commented in an interview with CBS.
In her opinion, “China’s growth slowed sharply in 2022 and the Covid expansion is bad news for China and globally”.
For Georgieva, the world economy must diversify its supply chains not to be so dependent on a single country like China. “It is not just about costs,” she said.
In the case of the United States, the IMF managing director commented that “it will be able to avoid recession thanks to the strength of the labor market.” At the same time, she stressed that “this means that the Federal Reserve will have to continue raising interest rates” to combat inflation.
Recession and inflation
The threat of recession has hovered over the world’s major economies in recent months, a period in which most central banks have adopted more restrictive monetary policies intending to curb inflation, despite the consequences it may have on economic growth.
Beyond the high social cost that these measures may have, Schroder’s analysts recall that “recessions in developed economies are necessary to curb inflation”.
El FMI avisa: un tercio de la economía mundial caerá en recesión en 2023
2) The World Bank warns of a debt crisis in developing countries
According to the latest report by the international financial organization, nearly 60% of the poorest countries are already at high risk of over-indebtedness or are directly in this situation.
The World Bank (WB) warned on Tuesday that rising interest rates and a slowdown in global growth could lead to a debt crisis in many developing countries.
The poorest countries that qualify for loans from the International Development Association (IDA), a member of the World Bank, now spend more than a tenth of their export revenues on servicing their public and publicly guaranteed long-term debt. At the end of 2021, the external debt of all developing economies —low- as well as middle-income economies— amounted to $9 trillion, more than double what it was a decade ago. During the same period, the total external debt of poorest countries almost tripled to $1 trillion.
Debt-Service Payments Put Biggest Squeeze on Poor Countries Since 2000
3) Outlook 2023. Inflation, interest rates, debt recession, the rising value of the dollar, bond markets
Irene Mia, editor of the International Institute for Strategic Studies (IISS), a think-tank on security, political risk and armed confrontation, puts the number of military confrontations on the planet at 33 in 2022.
The rapid rise in interest rates has failed to curb inflation, which will still be public enemy number one for the economic and monetary authorities in 2023. The Centre for Economics and Business Research (CEBR) is predicting that the world’s GDP will exceed 100 trillion dollars for the first time in 2022.
This British consultancy predicts that China will overtake the US as the largest global economy in 2036. “Recession is inevitable with current credit conditions and the meteoric response that central banks have instilled to act against spiralling prices,” explains Kay Daniel Neufeld, director of forecasting at the CEBR.
An analysis that is in line with the IMF’s prediction that more than a third of international activity will contract with a 25% chance that global GDP will grow by less than 2%, the ceiling that determines the planet’s productive recession line.
Southeast Asia and the Pacific will account for more than a third of global output, with Europe declining to less than a fifth of global GDP. This year will mark the turning point of this distant horizon.
The dollar will make access to global finance more expensive. The greenback appreciated in September to its highest level in decades – by almost 20% – against a basket of currencies held in central banks’ international reserves.
Global indebtedness contracted in 2021, according to the latest IMF data, but is still far from its pre-covenant level and under the tension of the strong dollar. With a double standard when it comes to measuring its caliber. It falls in relation to a world GDP in decline compared to 2019, which is why it shrinks ten points to 247% of the size of the global economy. On the other hand, at the same time, it soars to a total of 235 trillion dollars for its dollar denomination.
Victor Gaspar, director of the IMF’s Fiscal Department, warns that the amount of sovereign, non-financial corporate and household debt will increase even more in 2022 – when it is counted in the institution’s Global Debt Database- and probably also in 2023 due to the resources that governments around the world must employ to contain the inflationary spiral. However, 2023 should be the year in which the first measures of budgetary discipline are instilled, without goals of balance or consolidation in the medium term.
This happens in an atmosphere of waning investor confidence in bond markets, which lost more than $75 billion in 2022. In essence, by the cancellation of issues postponed during the tumultuous summer and autumn months in bond operations and in credit and equity-linked assets gripped by geopolitical tensions and interest rate hikes.
Decálogo para entender el tránsito económico y financiero entre 2022 y 2023
Elements of International Communist Interpretation: Perspectives
The incubating crisis of overproduction of capital is already showing some crucial signs and tendencies, being credited to an IMF and WB that are giving warning signals. If in the previous international crisis, which began in 2008, almost a quarter of capital was deeply devalued, now they are announcing that this could rise to a third.
This shows that the historical and dialectical movement of development and the periodic crises of capital generates ever broader and harsher consequences, which limit the means and resources used by capital. The massive use of monetary means after the previous crisis has been generating a series of conditions, among which the current inflation is the most remarkable. This inflation unfolded when the supply (MONETARY) after the pandemic supply crisis was surpassed, forcing the central banks, starting with the FED and the Chinese CB, to raise rates, forcing the step towards the beginning of a more profound and more internationalized recessive period of open crisis of capitalist devaluation and destruction.
Right now, China, the EU, and the US are already in this dynamic towards the open explosion of the crisis. At the same time, the rest of the capitalist world suffers the consequences of debt and the difficulties of access to investment that it entails. The movement in the rate of profit is still limited. On the one hand, the most powerful and competitive capital raises it. On the other hand, the rest sees it deteriorate downwards, while the world market loses tone, in the significant phrase of the IMF.
Several assets have already been devaluated on the stock markets, and what is coming will be worse but in leaps and bounds. The cryptocurrency market has exploded, in turn. And all this in a context where not only the major inter-imperialist war in Ukraine is unfolding but also many other military conflicts and a wide dispersion of friction zones are forcing capital to develop huge militaristic expenditures. A colossal capital drain is coming, and some of the monetary “bazookas” and financial maneuvers deployed before have been limited. This is very important with regard to the current trends and the future.
Therefore, solid pressures and attacks on the working class are expected, as well as high competition between capitals. The two poles that form the current blocs of capitalism (USA, EU, Japan, Canada, Australia, and allies against China, Russia, part of the BRICs and allies, with a third power India, on the rise and still without a clear choice towards a bloc) follow their historical course of clashes and frictions at different levels, determined by the room for maneuver and the tendencies of the rest of the capitalist states in the world, and their zones of imperialist competitive friction.
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