Global GDP is set to grow by 2.9 percent in 2023 and 3.1 percent in 2024. Inflation, while seeming to have peaked in many economies, is still very high. As a result, central banks are likely to maintain tighter financial conditions, which will weigh on global growth.
The United States and Europe can expect below-trend growth due to central bank interest rate hikes as well as lenders tightening credit conditions in the wake of failures, forced sales, and other banking strains. The United Kingdom could lag other advanced economies given its greater inflation challenges.
Among emerging markets, China will enjoy an economic rebound following its reopening from pandemic shutdowns. In India, progress on reforms will buoy economic activity, while structural issues are likely to continue to stymy Brazil's economic activity. Russia's economy is still weakened by fallout from invading Ukraine.
This PIIE Chart is adapted from Karen Dynan's blog, Persistent inflation, banking turmoil cloud global economic outlook, and her Spring 2023 Global Economic Prospects presentation, available here.