Global Economic Forecasts: Q4 2023

October 2023

The global economic outlook has further improved in the second half of 2023, supported primarily by the resilience of the US economy. Yet, conversely, global growth expectations for 2024 have declined and even fallen below the rate of 2023. This second consecutive year of a slowing global economy will be due to the impact of restrictive monetary policy in advanced economies, paired with weaker growth in China. Developing economies will maintain solid growth, with Asia Pacific leading the way.

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Key findings

The global economy will see growth weaken further in 2024

The global economy has shown unexpected resilience in 2023, despite elevated inflation and tighter monetary policy in most economies, resulting in a third consecutive upward revision of real GDP growth to 2.8%. This has been driven primarily by surprising strength of the US economy. For 2024, however, global growth expectations have declined and are now lower than for 2023, at 2.7%. This comes as restrictive monetary policy is expected to slow momentum in the services sector and labour markets in advanced economies, against the backdrop of already weak manufacturing and global trade.

Major economies to face diverse challenges and weak growth environment in 2024

The US has continued to surprise to the upside in 2023 behind resilient consumer spending and labour market strength. By contrast, the Eurozone has stagnated, especially as weak foreign demand has weighed on manufacturing. Yet, in 2024, the Eurozone is expected to recover modestly while the US will slow significantly as the impact of restrictive monetary policy eventually softens the labour market and slows consumer spending. China will continue to grapple with its ailing property sector and remain below potential in 2024 amid weak business and consumer confidence, seeing growth slow from 5% in 2023 to 4.7%.

Asia Pacific will lead the way among resilient developing economies

The diverging trend between advanced and developing economies seen in 2023 will further widen in 2024, as growth in advanced economies is expected to slow to 1.1%, from 1.4% in 2023, while growth in developing economies will remain stable at 4.0% in 2024. Here, the Asia Pacific region will stay the primary source of global growth, driven in particular by the accelerating momentum in 2024 in Vietnam (6.0%), the Philippines (5.7%) and Indonesia (5.1%), plus India, the fastest growing major economy in 2024 at an expected 6.1%.

Scope
Key findings
Global baseline outlook: Global growth expected to see post-pandemic low point in 2024
Global inflation expected to moderate notably amid ongoing global economic slowdown
Geopolitically-driven supply-side disruptions present major upside inflation risks in 2024
Businesses need to monitor increasing and diverse risks amid slowing growth environment
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 scenario map: Risks increase as major downside scenarios become more likely
Global Risk Index scores and rankings
Global stagflation scenario: Diverse challenges heighten uncertainty in major economies
Commodity price hike scenario: High exposure to increasing geopolitical risks
Global fragmentation scenario: Policy-induced decoupling weakens global growth potential
US: Surprising economic resilience to weaken amid growing impact of high interest rates
US: Weaker spending and softer labour market will keep (core) inflation on downward trend
U S: Relation between confidence and spending to normalise amid economic slowdown
US: “Higher-for-longer” stance presents key domestic risk in addition to high global volatility
China: Property market woes and weak global demand weigh down on the outlook
China: Manufacturing activity sees fragile recovery on gradually improving domestic demand
China: Intensifying property market troubles are a key threat to China’s outlook
India: Strong outlook supported by robust private consumption and capital spending
India: Weak external growth among the major risks to India’s outlook
Japan: Tourism revival supports services growth, but weaker export demand clouds outlook
Japan: Global slowdown, surging oil prices and weak yen among key downside risks
Indonesia: Falling exports and rising geopolitical tensions challenge the positive outlook
Eurozone: Weak and fragile growth environment to persist in 2024
Eurozone: Downtrend of inflation expected to continue at a slower pace
Eurozone: Vulnerabilities remain significant amid elevated global risk environment
UK: Growth to moderate on lingering impact of high interest rates
UK: More persistent inflation and prolonged strikes could cast a shadow over the outlook
Russia: Recovering domestic demand supports growth, but outlook remains uncertain
Russia: High uncertainty stemming from the war in Ukraine and commodity market volatility
Brazil: Positive effects of the agricultural boost fade away, uncovering economic challenges
Brazil: Global slowdown, high borrowing costs and tighter fiscal policy cloud outlook
Mexico: US slowdown and 2024 elections loom over a positive economic outlook
Baseline and key alternative scenarios: Q4 2023
Other alternative scenarios: Q4 2023
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