Global Economic Forecasts: Q2 2023

Delivery

This report comes in PPT.

Key Findings

The global outlook sees slight improvement amid slowdown in 2023

The global economy is expected to slow significantly in 2023, with global real GDP forecast to increase by 2.5%. This constitutes low growth by historical standards, resulting from persistent inflation and rising interest rates, affecting businesses and consumers globally. Yet, the global economic outlook has slightly improved, with the growth momentum reversing both in advanced and emerging economies amid high resilience and China’s recovery. Nonetheless, uncertainty remains unusually high due to a multitude of risks and headwinds which keeps the likelihood of a downside scenario for the global economy in 2023 elevated.

Resilience in the US and Eurozone will be tested as high inflation and rising interest rates weigh on growth

The US and Eurozone will record low growth in 2023, with real GDP increasing by 0.9% and 0.5%, respectively. However, both economies have surprised to the upside in Q1 2023, with labour markets remaining tight and consumer spending still resilient, leading to a slightly improved outlook. However, persistent inflation, excluding food and energy, as well as steadily rising interest rates will weigh on growth in the US and Eurozone in 2023. Financial instability in the US has added a further layer of uncertainty over the economic trajectory.

Growing emerging market strength results in an increasingly multi-speed global economy

The global economy will see a considerable discrepancy in the growth between advanced and emerging economies in 2023. China’s faster-than-expected rebound following its post-pandemic reopening will support global growth and add further impulses to a region that has seen a significant and continuous economic expansion. Even amid multiple headwinds, economies in Asia Pacific, including India, Indonesia and Vietnam, have continued to surge, thereby fuelling the global economy in 2023. This is further supported by other emerging markets, particularly the Gulf countries.