Colin Ellis said the agency is currently reviewing its economic forecasts, as it revealed in March last year, explaining that the indicators at the time “showed that the economies of the Group of Twenty, for example, would grow by around 3 , 5% during 2022, and this figure meant that they would grow at a rate higher than the long-term average of 3%, and this can be explained by the continuation of the journey of economic recovery from the effects of the Corona epidemic. “
During the interview, the official of the International Financial Assessment Agency revealed the Agency’s estimates in the light of the Ukrainian crisis and expressed his belief that the growth rate will be lower than previous estimates, and “we will see weaker growth in many countries and this will put some of those at risk of economic recession. “
How do we think about stagnation?
But Colin Ellis believes it’s important here “to know how to think about a recession. Because in some parts of the world, when the economy grows by about one or two percent, it is seen as a recession, and economists usually talk about a recession. as a decline in growth in two consecutive quarters, so globally I can say that economic growth will be weaker than previous forecasts. “
He stated that “as long as the conflict in Ukraine continues, we will continue to see fluctuations in commodity markets and prices will continue to move up and down, but the level of these fluctuations may decrease to some extent.”
He referred to what is happening in “some futures markets and what the financial markets expect, so we will see that prices will fall as we move forward in time, ie after a year or two, but all this is undoubtedly uncertain and will depend primarily on whether the development of the Ukrainian crisis. “
Colin Ellis predicted that inflation will fall next year, although energy prices continue to rise, explaining that central banks “have a difficult job to do, they have to strike a very difficult balance between the huge rise in inflation that we look now and not hurt the economic recovery. “
He suggested that energy prices will remain high compared to the past for a long time, but that does not necessarily mean that we will see high inflation figures in 2023 or 2024, because inflation figures are based on comparison, and at that time we will be comparing prices, which were already high in 2022.
He believed that the current high inflation rates would put pressure on economic growth rates and thus on spending, which would reduce the intensity of inflation, and stressed that “the difficulty in my opinion will depend on whether inflation will be anchored in the economy or not, which means that price fluctuations and their rise are a normal event in the markets, but the important thing is whether this rise in prices will lead to an increase in wages and thus a continuation of strong consumption and thus a continuation of the inflation spiral. “
He assumed that “if central banks can avoid this, ie prevent wages from rising aggressively in response to rising inflation, then we will have an opportunity to curb the deterioration of the economy, and that is what central banks are trying to do, “and emphasized that” the economic outlook for Europe has deteriorated significantly in the first half of this year. “
He reviewed the state of the economy before the Ukrainian crisis, explaining: “We have seen a marked increase in energy prices since mid-2021, and this led to a marked increase in inflation rates, although this increase is described as temporary from the point of view of some, and these inflation rates will have a real impact on human consumption and demand rates, and this will undoubtedly put pressure on economic growth. “
He pointed to the direct consequences of the Ukrainian crisis, which include several aspects, such as aid from Europe to Ukraine and the sanctions that are expected to be extended to the oil embargo.
Over time, Colin Ellis believes there is a tendency to reduce dependence on Russian gas and it will become a difficult topic and if it starts as soon as possible, it will affect growth in the second half of this year.
He described trying to reduce dependence on Russian gas as being more difficult, but if this process begins soon, it will certainly affect economic growth in the second half of this year.