At the end of last year, many economic indicators were turning red and a recession in most countries of the world seemed to be the consensus. The latest adjustments by economic forecasters bring some optimism for 2023. The predicted recession in the advanced economies will be more moderate. After global growth of -3% in 2020, +6.2% in 2021, +3.4% in 2022, the IMF forecasts +2.9% for 2023. However, there are disparities between regions: USA: +1.4%, China: +5.2%, UK -0.6%, Eurozone +0.7%, Middle East + 3.2%.
On the other hand, political instability increases across most continents and the G-Grade shows a deterioration in the following countries this quarter:
(-0.75) Ghana: the country’s rating deteriorated from 7.00 to 7.75: It is the fiscal situation that poses a problem. The burden of public debt, the current account deficit and high inflation are simultaneously impacting the country economy, which is still very dependent on its exports.
(-0.50) Bangladesh: downgraded from 6.50 to 7.00: the current account balance remains structurally in deficit, the country remains politically unstable with repeated coups in recent years, while corruption remains omnipresent.
(-0.50) Burkina Faso: On 24 January, the army staged a coup and deposed the government and the borders were also closed. The country suffers from deep political instability.
(-0.50) Czech Republic is very dependent on its exports and the Czech economy was particularly impacted following Covid-19 (GDP : -5.5% in 2020 according to the IMF). Since then, the economy has struggled to catch up and growth is expected to be only +1.5% in 2023.
(-0.50) Haiti: downgraded by two insurers over the quarter, the G-Grade has fallen from 9.25 to 9.75. The country’s economy has stalled as a result of violent gangs taking control of the country, preventing any economic progress.
(-0.50) Peru: The country’s economy lacks dynamism and GDP growth is likely to drop from +13.6% in 2021 to +2.6 in 2023! The country also faced major political unrest in 2022. This explains the downgrade from 4.00 to 4.50.
(-0.50) Uganda’s rating is also downgraded this quarter from 6.50 to 7.00
The only improvement to be noted concerns Oman. Upgraded by +0.50, the growth of its oil production, in a context of rising oil costs, significantly improves the country’s situation, notably through solid growth and contained inflation.