Global Economic Forecasts: Q3 2022

September 2022

The global economic outlook continues to be suppressed by surging inflation and growing uncertainties caused by the ongoing war in Ukraine, rising geopolitical tension in Asia, tightening of global financial conditions, and China’s economic slowdown. Global real GDP growth is expected to slow significantly from a strong recovery of 6.2% in 2021 to 3.0% in 2022 and 2.9% in 2023. Inflation is forecast to stay elevated, curbing real income growth and squeezing living standards in many countries.

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Key findings

Global economic outlook dampened by high inflation and geopolitical risks

Gloomy developments since early 2022 continue to set the global economy on a course of slower growth and higher inflation. Global real GDP growth is forecast to decline to 3.0% in 2022 and 2.9% in 2023, after a strong recovery of 6.2% recorded in 2021. Downside risks have increased, with uncertainties coming from various sources, including the ongoing war in Ukraine, geopolitical tension between China, Taiwan and the US, skyrocketing inflation, a sharp tightening of global financial conditions, and China’s economic slowdown.

Worsening outlook for the US and the Eurozone

The US economy faces a significant slowdown risk in Q3 2022, as consumer and business confidence weaken further amid fading pent-up demand, multi-decade high inflation and tightening financial conditions. Eurozone economies continue to be hit hard by the impact of the war in Ukraine, given their high exposure through energy imports. Growing uncertainty over energy supply, particularly for the coming winter, coupled with weakening global and regional demand, are dragging down the Eurozone’s growth outlook.

A significant slowdown expected for the Chinese economy

China’s economic slowdown has been more significant than expected, driven by the negative effects of COVID-19 restrictions and increasing infections, a deepening property market crisis, lacklustre domestic consumption, and weakening global demand. China’s slowdown could spillover to other major economies through imports, thus affecting the global growth outlook.

 

Scope
Key findings
Global baseline outlook: Inflation and geopolitical risks make the outlook gloomy
As inflation ticks up, central banks are tightening monetary policies
Uncertainty in energy markets poses severe risk of further inflationary pressures
Downside risks have increased substantially
Real GDP annual growth forecasts and revisions from last quarter: AE
Real GDP annual growth forecasts and revisions from last quarter: EMDE
Inflation forecasts
Central bank interest rates quarterly forecasts
Global risk map: Rising global stagflation risk
Global Risk Index scores and rankings
Global stagflation scenario: Major downside risk looms larger
COVID-19 pessimistic scenario: Worsening pandemic still a risk
COVID-19 optimistic scenario: Faster global recovery possible but unlikely
US: Tightening financial conditions and inflation bring the economy to the brink of recession
US: Elevated downside risk on global geopolitical and economic uncertainties
US: Inflation slightly eases in July 2022, but pressures will remain high in 2022-2023
US: Consumer and business confidence plummet
China: Lower global and domestic demand further dampen growth outlook
China: Forecast risks
China: Household and business confidence struggle amid possibility of further lockdowns
India: General outlook
India: Forecast risks
Japan: General outlook
Japan: Forecast risks
Indonesia: Export boom fuels economic resilience in Q3
Eurozone: Uncertainty over energy supply makes the outlook gloomy
Eurozone: Forecast risks
Eurozone: Inflation hits fresh record, pressures remain high
UK: Growth outlook undermined by high inflation and falling consumer confidence
UK: Forecast risks
Russia: General outlook
Russia: Forecast risks
Brazil: General outlook
Brazil: Forecast risks
Mexico: High inflation and weakening trade threaten economic recovery
Summary 1 baseline scenario and main downside risks: Q3 2022
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