An economic outlook for this planet Earth

 

      Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook (WEO) of the International Monetary Fund (IMF), it remains weak by historical standards. The World Health Organization (WHO) announced in May that it no longer considers COVID-19 to be a global health emergency. Supply chains have largely recovered, and shipping costs and suppliers’ delivery times are back to pre-pandemic levels. But forces that hindered growth in 2022 persist. Inflation remains high and continues to erode household purchasing power. Policy tightening by central banks in response to inflation has raised the cost of borrowing, constraining economic activity. Inflation not just that remains high but is going to increase for the general masses of humans which somewhat are from and live on this planet Earth this year and next year, especially for the United States of America (USA). Financial sector turbulence could resume as markets adjust to further policy tightening by central banks.

      The recent resolution of the US debt ceiling standoff and, earlier this year, strong action by authorities to contain turbulence in US and Swiss banking, reduced the immediate risks of financial sector turmoil. This moderated adverse risks to the outlook. However, the balance of risks to global growth remains tilted to the downside. Inflation could remain high and even rise if further shocks occur, including those from an intensification of the war in Ukraine and extreme weather-related events, triggering more restrictive monetary policy. The rise in central bank policy rates to fight inflation continues to weigh on economic activity. High interest rates are filtering through the financial system, and banks in advanced economies have significantly tightened lending standards, curtailing the supply of credit. The impact of higher interest rates extends to public finances, especially in poorer countries grappling with elevated debt costs, constraining room for priority investments. As a result, output losses compared with pre-pandemic forecasts remain large, especially for the world’s poorest nations. However, as mobility returns to pre-pandemic levels, the scope for further acceleration appears more limited.

      Amid softening consumption of goods, heightened uncertainties regarding the future geoeconomic landscape, weak productivity growth, and a more challenging financial environment, firms have scaled back investment in productive capacity. At the same time, nonservices sectors, including manufacturing, have shown weakness, and high-frequency indicators for the second quarter point to a broader slowdown in activity. Excess savings built up during the pandemic are declining in advanced economies, especially in the United States, implying a slimmer buffer to protect against shocks, including those to the cost of living and those from more restricted credit availability. Gross fixed capital formation and industrial production have slowed sharply or contracted in major advanced economies, dragging international trade and manufacturing in emerging markets with them. International trade and indicators of demand and production in manufacturing all point to further weakness. Thanks to the authorities’ swift reaction, the March 2023 banking scare remained contained and limited to problematic regional banks in the United States and Credit Suisse in Switzerland.

      Growth in the euro area is projected to fall from 3.5 percent in 2022 to 0.9 percent in 2023. Growth in the United Kingdom is projected to decline from 4.1 percent in 2022 to 0.4 percent in 2023. This is an upward revision of 0.7 percentage point for 2023. In the United States, growth is projected to slow from 2.1 percent in 2022 to 1.8 percent in 2023, then slow further to 1.0 percent in 2024. For 2023, the forecast has been revised upward by 0.2 percentage point, on account of resilient consumption growth in the first quarter. Consumers have largely depleted excess savings accumulated during the pandemic, and the United States of America's Federal Reserve is expected to raise rates further. For emerging market and developing economies such as the BRICS alliance of nations, growth is projected to be broadly stable at 4.0 percent in 2023 and 4.1 percent 2024, with modest revisions of 0.1 percentage point for 2023 and –0.1 percentage point for 2024.

      All those predictions about rising or falling economies are provided by the International Monetary Fund (IMF) on their website.