Global Growth and Economic Outlook in July 2023

ByAudInsights.blog

The International Monetary Fund (IMF) projects a decline in global growth from 3.5% in 2022 to 3.0% in both 2023 and 2024. Although the forecast for 2023 is slightly higher than previously predicted, it remains weak compared to historical standards. Inflation rates are expected to decrease from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024, with underlying inflation declining more gradually.

Consumer confidence has improved, but cautiousness persists in making major purchases. Brazil saw an increase in consumer confidence, while many countries recorded contraction in consumer spending, particularly China.

Central banks have managed to keep inflation expectations stable, although Russia and India have seen slight increases in inflation. The Federal Reserve raised interest rates, marking the 11th increase since 2022. The European Central Bank and the Bank of England also raised their interest rates.

In terms of GDP growth, the US experienced a 2.4% increase in the second quarter, while the Eurozone grew by 0.3%. Individual performances of major EU economies varied, with France and Spain showing growth, Germany remaining stagnant, and Italy experiencing a contraction. The UK’s GDP growth is expected to be modest. China’s GDP showed a significant increase from a low base in 2022, and other economies also showed signs of rebound.

The labor market remains tight in many countries, although unemployment rates remained stable with slight increases in India and the US. Equity markets in India, Japan, and the US saw gains, while other countries remained unchanged or experienced declines. World trade volumes have seen decreases in emerging economies, with variations in exports and imports across different countries.

A significant change in the nature of work has been observed, with remote and hybrid models becoming more prevalent. Demand for office and retail space in superstar cities is expected to remain below pre-pandemic levels, with employees spending less time in the office. As a result, residents are leaving urban centers, and foot traffic near stores in metropolitan areas remains below pre-pandemic levels. Cities can adopt hybrid approaches and prioritize development and adaptability to thrive in this changing landscape.

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Source: Global Economics Intelligence executive summary, July 2023

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