The outgoing year brought the worst downturn in the global stock market in more than a decade. The widespread increase in interest rates by the central banks of the world, the crisis in Europe due to the conflict in Ukraine, strict quarantine measures in China – all this has led to the fact that the economic indicators of many countries have shown a record drop. Investors around the world are looking at 2023 with disbelief, wondering what awaits the world economy in the near future. Let's try to figure it out. ENTRENCHED INFLATION A number of analysts believe that inflation will return to normal in 12 months. However, many experts do not share this opinion, because due to the risk of spiraling wages and supply-side pressure (in the form of higher energy prices), the growth rate of consumer prices may accelerate again. This, in turn, will exclude the possibility that the US Federal Reserve and the ECB will begin to weaken their monetary policy. COVID-19 IN CHINA Coronavirus continues to be one of the main problems for the Chinese economy, despite some easing in the policy of combating Covid. Chinese experts believe that the infection curve will only grow and reach a peak one or two months after the Chinese New Year. As a result, the Chinese stock market will be particularly susceptible to volatility, and any prospect of a decline in economic activity will undermine demand for industrial metals and iron ore. CONTINUATION OF THE CONFLICT IN UKRAINE In the event of an escalation of the conflict and a more direct participation of the NATO bloc in it, the whole world is waiting for deplorable consequences again. In addition, the strengthening of secondary sanctions against Russian trading partners, especially India and China, would lead to an increase in supply-side problems: food, energy and other items such as fertilizers, metals and chemicals. THE RETURN OF COVID-19 A more contagious or deadly strain of COVID-19, which may mutate and manifest itself in 2023, is capable of starting to block supply chains again, which will lead to inflation and a slowdown in economic activity.
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