S&P also lowers its estimates for Italy in its new report on the global economy.
The recession in 2023, under the weight of inflation and geopolitical risks, is now expected to be 1 percentage point higher, with a decline in GDP of 1.1% and a return to growth in 2024 but only by 0.8 %, 90 basis points worse than the baseline scenario and 1.2% in 2025. For the Eurozone, the expectation is a drop of 0.9% in 2023, and GDP growth of 0.8 % in 2024 and 1.4% in 2025.
The global economy is facing a double downside risk, on the one hand "persistent inflationary pressures, which require a stronger and longer-lasting monetary policy response from central banks" on the other "the drag on of the war Russia -Ukraine, which exacerbates the ongoing energy crisis and increased risk aversion."
The negative scenario is designed by S&P Global Ratings in its report which considers three variables, growth, inflation and unemployment, for 2023-2025.
According to S&P estimates, this scenario has about a one in three chance of happening.
Europe would be hit the hardest: Eurozone growth would be 90 basis points (bps) weaker than in the baseline scenario in 2023.
