Economist Predicts Decade of Low Economic Growth Ahead

Daniel Lacalle, author and chief economist at Tressis Gestion, believes that the global economy is likely to experience a decade of sluggish growth.

Economies around the world have been struggling to cope with a range of shocks - from Russia's invasion of Ukraine to China's ongoing zero-Covid measures - which have caused inflation to soar and activity to weaken.

The International Monetary Fund has revised its projections for global GDP growth, now expecting a slowdown from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. This is a weaker growth profile than what was seen in 2001, with the exception of the global financial crisis and the acute phase of the Covid-19 pandemic.

Meanwhile, global inflation is forecast to rise in the next few years, remaining above the target levels for many major central banks. Inflation is expected to reach 8.8% this year before declining to 6.5% in 2023 and 4.1% by 2024.

China's announcement that it will end quarantine requirements for inbound travelers on Jan. 8 is seen as a positive step by economists and market participants. This symbolizes an end to the zero-Covid policy that China has held for nearly three years, and offers some hope for the future.

In an interview with CNBC's "Squawk Box Europe" on Tuesday, Lacalle said that the potential for a full reopening of the Chinese economy was the biggest positive that markets could expect for 2023.

A very bleak picture has been painted for the Chinese economy, which is essential not just for the growth of the rest of the world but particularly for Latin America and also for Africa.

The reopening of the Chinese economy is expected to give a significant boost to global growth. This will be a relief for German and French exporters who have been struggling due to the lockdown and weakening demand from China.

However, he suggested that this boost will not be enough to bring growth levels back to where they were before the pandemic for a while.

Lacalle believes that developed economies are likely to experience very poor growth in the next decade, with annual growth of just 1% being considered lucky. He believes that inflation levels will be elevated, making the situation even more unfortunate.

I believe that the current economic situation is the result of the large stimulus packages that were put in place in 2020 and 2021. These packages have not delivered the kind of growth that many economists had anticipated.

Despite the bleak outlook, he emphasized that there is not a crisis on the horizon. This is reassuring news for many people who were worried about the state of the economy.

In his opinion, markets are beginning to factor in the current global environment, which is not one of strong economic growth, but rather one that is avoiding a financial crisis. If this continues, it will be positive, he concluded.