By Pierre-Olivier Gourinchas
The global economy continues to face steep challenges, shaped by the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.
Our global growth forecast for this year is unchanged at 3.2 per cent, while our projection for next year is lowered to 2.7 per cent – 0.2 percentage points lower than the July forecast. The 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies, the United States, China, and the euro area will continue to stall. Overall, this year’s shocks will re-open economic wounds that were only partially healed post-pandemic. In short, the worst is yet to come and, for many people, 2023 will feel like a recession.
In the United States, the tightening of monetary and financial conditions will slow growth to 1 per cent next year. In China, we have lowered next year’s growth forecast to 4.4 per cent due to a weakening property sector and continued lockdowns.
