Global Economic Forecasts: Q3 2023

Delivery

This report comes in PPT.

Key findings

Sentiment further improves while overall outlook remains weak

The global economy is in the midst of a significant slowdown, as real GDP growth is expected to decelerate to 2.6% in 2023. While this remains far below the long-term growth trend, the global outlook has seen gradual improvements in recent quarters. This has been driven especially by resilience in the services sector and labour markets despite persistent inflation and high interest rates in most countries. Lingering inflation and the lagged effect of high borrowing costs will continue to keep global growth subdued at 2.9% in 2024.

Trajectories and drivers between major economies increasingly differ

The US and the Eurozone are expected to see weak growth in 2023, with real GDP increasing by 1.2% and 0.6%, respectively. While facing similar headwinds in terms of elevated inflation and rising interest rates, the US outlook has improved more significantly, as both economies saw a forecast of 0.2% growth in Q1 2023. China remains a key driver of the global economy in 2023, with 5.3% growth. However, the country’s post-pandemic recovery has slowed notably, raising concerns about a lower contribution to global growth in 2024.

Emerging and developing economies continue to defy the global trend

Emerging and developing economies remain the growth of engine of the global economy in 2023. At 3.9% real GDP growth compared to 1.0% for advanced economies, emerging and developing economies will continue to increase their global economic share. This is particularly the case for the Asia Pacific region where four economies will grow at more than 5% in 2023: China (5.3%), India (5.8%), the Philippines (5.6%) and Vietnam (5.5%). In 2024, India and Vietnam are even expected to grow at more than 6%.