But where did the recession go? In our country, as in the rest of Europe and the United States, the dreaded economic storm has not occurred. Consequence: growth revisions all over the world.
A recession? What recession? The gloomy predictions of a sharp fall in the economy have not materialized. Germany, euro zone, United States: no more disaster, depressed households, the wall of bankruptcies… Contrary to expectations, Western economies held up better than expected to the shocks of the war in Ukraine and soaring prices.
According to the latest figures from the National Bank, activity in our country remained in positive territory, with a 0.1% growth in the last three months of the year. In the end, Belgium’s GDP growth reaches 3.1% over the whole of 2022. Even the financial results of Belgium SA are better than expected. Much better even, since the latest estimates from the Secretary of State for the Budget Alexia Bertrand (Open Vld) show an improvement in the deficit of… 7 billion euros!
Generalized mea culpa
The trend reversal is general. Almost everywhere in the world, growth forecasts are revised upwards. “While all the major institutional forecasters (International Monetary Fund, Organization for Economic Co-operation and Development) had announced a slight recession for the beginning of 2023, they find that the last quarter of 2022 was macro-economically better than expected and begin to change their minds”, observes Eric Dor, director of economic studies at the IESEG School of Management in Paris and Lille.
The latest update of the IMF’s projections published at the end of January indeed shows a great resilience of the economies of developed countries. After having recorded a growth of 3.4% last year, the world economy should grow this year by 2.9%, while the previous forecasts of the famous institute were betting on only 2.7%.
“The abandonment of the zero covid policy in China has revived all hopes. »
Thus, in the United States, American growth, driven by household consumption and the astonishing vigor of employment, should show a 1.4% increase this yearwhile previous IMF forecasts were for just 1%.
For the euro zone, the IMF has also revised its forecasts slightly upwards, with a growth of 0.7% in 2023 once morest 0.5%, believing that Europe has adapted to rising energy costs faster than expected. Even Germany, which is highly dependent on Russian gas, should register a slight growth of 0.1% this year.
Where does this resilience come from? “In the United States, the job market remains more robust than expected, which supports consumption, which has slipped from goods to services, notes Bernard Keppenne, economist at CBC. In Europe, the morale of consumers and manufacturers picked up slightly at the end of last year thanks to the very sharp drop in gas prices and government support measures, two elements that prevented GDP from seeing move into negative territory at the end of last year. As for China, lhe abandonment of the zero covid policy has revived all hopes of seeing the economy recover following the New Year period.”
Banks at the party
Clear proof that things are going better than the Cassandras of the economy predicted: the historic profits generated in 2022 by banks. While they had been among the first to warn regarding the high degree of uncertainty, here they are today at the party. Example? BNP Paribas, the leading bank in the euro zone. Last year, the parent company of BNP Paribas Fortis generated more than 10 billion in profits. Be the best result in its history.
The worst-case scenario was avoided thanks in particular to a mild winter.
As his boss Jean-Laurent Bonnafé explained in the columns of Figaro the day following the publication of the results of the French banking group, governments have done everything possible to support the economies, even if this will increase the debts of the States. “Between 800 and 1,000 billion will have been injected in two and a half years. This represents 6% to 8% of European GDP. To this is added the post-pandemic european investment plan.”
Jean-Laurent Bonnafé adds that companies have been able to adapt by improving their efficiency or leveraging technology. “Many of them continue to invest in their development.”
In another register, the weather also helped, with mild temperatures at the end of the year. “There was not a lack of gas to get through the winter as one might have feared, which is in large part the reason why the deep economic recession that was feared did not materialize”, underlined a few days ago the CEO of KBC Johan Thijs on the occasion of the presentation of the results of the Belgian bank-insurer.
Better than expected results also boosted by the rise in interest rates. After years of negative interest rates, the sector is indeed finding a more traditional business model: make margin by collecting deposits to grant loans.
A model that is all the more promising today as banks have spared no effort in recent years to combat negative rates, paying for a series of services that were previously free (accounts, cash withdrawals, access to an advisor, etc.). As many stars have not been so well aligned for them for a long time. But when the banks are doing well, everything is going well…
The worst, never certain
However, as Bernard Keppenne points out, caution is still in order for the coming months. “The year will be marked by a marked slowdown compared to 2022 which was, it should not be forgotten, an excellent year in terms of growth. Again, it is necessary to distinguish the situation according to the regions. In the United States, we are in for a soft landing for the economy and the risk of recession is extremely low given the robustness of the job market. In Europe, Germany might still experience a small recession but, overall, the euro zone should post growth of 0.4%, admittedly weak, but no recession. In China, domestic demand should support growth, which should hover around 5%.
Except that everything will undoubtedly depend on the most crucial element, namely the evolution of the price of gas and the question of supplies to replenish reserves in Europe for the coming winter. But in the meantime, as this article shows once once more, it is clear that the worst is never certain. So let’s not shun the thinning. And let’s stay positive.
