Global Economic Forecasts: Q4 2022

November 2022

A slowdown in the global economy has become more evident, and growth prospects continue to face multiple headwinds and downside risks. Persistently high inflation, energy and cost-of-living crises, and simultaneous global interest rate rises are denting private consumption, investment and other economic activities, while China’s economic slowdown weighs on the overall global growth outlook. Asia Pacific is expected to drive global growth in 2023, amid a very low growth environment in the US and

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Key findings

Global economic outlook deteriorates amid high inflation, rising interest rates and geopolitical risks

A confluence of worsening risks, crises and uncertainties over the course of 2022 have set the global economy on a path of weaker growth and surging inflation. Global real GDP growth is forecast to slow to 3.0% in 2022 and 2.3% in 2023, after a strong recovery of 6.0% recorded in 2021. In Q4 2022, numerous downside risks cloud the global economic outlook: an ongoing global health crisis, as well as war and rising geopolitical tensions. Deteriorating economic conditions adversely impact advanced economies and additionally raise financial vulnerabilities for emerging and developing markets, as interest rates rise and the US dollar surges.

The US and Eurozone economies face growing recession risks

The US economy faces a considerable downturn risk in Q4 2022. Although inflation has been slowing and the labour market has shown resilience, confidence levels have remained low, as consumer demand and manufacturing output have weakened amid rapid monetary tightening. Meanwhile, the Eurozone economy faces significant risks and uncertainty due to the impact of the war in Ukraine. Energy supply uncertainties and permanently elevated price levels put considerable pressure on consumers and businesses, and the area’s growth outlook. 

Economic weakness in China continues to broaden

In Q4 2022, China’s real GDP growth remained significantly below its target for the year. This ongoing slowdown continues to be driven by the dampening effect of the country’s zero-COVID policy, in addition to lacklustre domestic demand and a profound property market crisis. The outlook for the world’s second largest economy could be further weakened by worsening US-China trade relations.

Scope
Key findings
Global baseline outlook: Growth suffers as inflation broadens and conflict continues
Rapid monetary tightening will slow economic activity and reduce inflationary pressures
Potential energy supply shocks remain primary driver of additional inflationary pressures
Numerous downside risks cloud the global economic outlook
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
US: Recession risks remain high despite inflation levelling off in Q3
US: Geopolitical tensions and global stagflation remain key forecast risks
US: Inflation downward trend accelerates as rapid rate hikes continue
US: Business and consumer confidence see slight uptick while outlook remains gloomy
China: Growth outlook clouded by slowing global and domestic demand
China: Forecast risks
China: COVID-19 restrictions and property crisis weigh on consumer and business confidence
India: Strong economic performance underpinned by reviving consumer demand
India: Forecast risks
Japan: Softening foreign demand to drag down economic growth
Japan: Forecast risks
Indonesia: Robust exports boost economic growth in 2022
Eurozone: Ongoing energy shock and impact of inflation weigh on economic outlook
Eurozone: Forecast risks
Eurozone: Inflation rises to new highs as prolonged price increases become more likely
UK: Growth outlook undermined by high inflation and falling consumer confidence
UK: Forecast risks
Russia: General outlook
Russia: Forecast risks
Brazil: Real GDP growth among the lowest in the region
Brazil: Forecast risks
Mexico: High inflation and rapid monetary tightening threaten growth
Summary 1 baseline scenario and main downside risks: Q4 2022
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