Global Economic Forecasts: Q1 2023

Delivery

This report comes in PPT.

Key Findings

The global economy slows sharply due to persistent inflation, restrictive monetary policy and geopolitical tensions

The global economic outlook for 2023 is among the weakest in decades, with global real GDP growth forecast to increase by 2.3% in 2023. The economic fallout from Russia’s invasion of Ukraine will weigh heavily on growth as demand is dampened by persistent inflation and the increasing impact of rising borrowing costs for businesses and consumers. In addition, the sharply reduced growth projection for 2023 remains fragile, as the global economy faces multiple headwinds, including immediate risks emanating from the ongoing war in Ukraine, elevated geopolitical volatility more broadly and rising economic fragmentation.

The US and Eurozone will edge closer to recession amid the slowing effect of surging interest rates

The US and the Eurozone still face the risk of recession with growth stalling in 2023. Both economies unexpectedly avoided recession in late 2022 behind resilient consumer spending and falling energy prices. However, elevated inflation excluding energy and food prices, paired with rising interest rates, will noticeably reduce private sector confidence and slow economic activity. In addition, the Eurozone will continue to face high energy uncertainty, particularly with regard to natural gas imports and electricity generation.

China‘s reopening and emerging market strength provide sources of optimism

Despite a bleak outlook and lingering risks, the global economy will see several growth impulses. China’s reopening following the unexpected end to its zero-COVID policy bears the potential of significantly mitigating the global downturn. Moreover, numerous emerging markets have proved resilient amid surging inflation, increasing interest rates and exchange rate volatility. This relative strength of economies, particularly in Asia Pacific, is expected to additionally support growth in 2023.