19 January 2024

Global economic and financial developments during 2023 proved more positive than many of the projections made at the beginning of last year. Despite several rounds of monetary tightening in numerous countries, these policy measures did not weigh down aggregate demand as much as anticipated.

Particularly in the larger advanced economies, financial market and job market conditions deteriorated less than expected. Consequently, the much-dreaded slide of the global economy into a recession did not materialize.

Over the course of the next weeks, more data will become available about worldwide economic and financial developments during 2023’s fourth quarter. This information will not only allow for more accurate estimates of last year’s output, but will also enable further fine-tuning of 2024’s global growth outlook.

Until now, several institutions have published their latest growth estimates for 2023, as well as their preliminary projections for 2024. As a result of the economic resilience noted throughout 2023, most recent growth estimates constitute an upward revision compared to previous ones.

Figure 1  Overview global economic growth estimates 2023

Figure 1 provides an overview of various updated estimates of global growth in 2023. All the latest updates shown were published during the first two weeks of January 2024, except for those of the Organisation for Economic Co-operation and Development (OECD) and Fitch Ratings (FR), which were published in November 2023 and December 2023, respectively.

As the Figure reveals, the World Bank (WB), the United Nations (UN), FR, and the European Central Bank (ECB) adjusted their 2023 growth estimate upwards. By contrast, the OECD made a small downward adjustment, based on the expectation that the tighter financial conditions, weak trade growth and lower overall confidence, weighed growth down more than anticipated.

No update is included yet for the International Monetary Fund (IMF) in Figure 1. Following the publication of the IMF’s World Economic Outlook by the end of January 2024, the IMF’s most recent update will be included.

Figure 2  Overview global economic growth estimates & projections 2021-2024

A review of the last few years’ economic data reveals that the growth of the global economy has been decelerating since 2022. Following a contraction in 2020, as a result of the COVID-pandemic, economic growth at the global level recovered to about 6.1-6.2% in 2021.

As shown in Figure 2, worldwide economic growth slowed down to about 3-3.5% in 2022, before slowing down further to 2.6-3.3% in 2023. During 2024, output growth is expected to decelerate for the third consecutive year, registering at about 2.1-2.7%.

Although the estimates and projections of the different institutions included in Figure 2 deviate somewhat from each other, they all indicate that a year-on-year deceleration has been taking place.

As discussed in an earlier article Economic outlook 2023 and beyond: lengthy period of subdued growth, the continued deceleration of global growth is concerning as many urgently needed policies and measures, such as the sustainable development goals and emission-reduction targets to combat climate change, may not get implemented.

As the most recent  UNCTAD Trade and Development report indicates, failure of global growth to rebound sufficiently to pre-pandemic rates, seriously puts at risk the tackling of several urgent matters, like food security, social protection, and climate adaptation.

Given the dire implications of not addressing these urgent matters, especially for the most vulnerable and disadvantaged around the world, it is therefore crucial that we strive more than ever to achieve economic growth that is not only sufficient, but also sustainable, inclusive, and equitable.

Sources:

• European Central Bank — Economic Bulletin Issue 8, 2023 – January 2024.
• Fitch Ratings — Global Economic Outlook – September 2023, December 2023.
• International Monetary Fund —  World Economic Outlook – July 2023, October 2023.
• Organisation for Economic Co-operation and Development — OECD Economic Outlook – Interim Report September 2023 – September 2023.
• Organisation for Economic Co-operation and Development — OECD Economic Outlook – Volume 2023 Issue 2: Preliminary version – January 2024.
• United Nations — UNCTAD Trade and Development Report 2023 – Growth, Debt, and Climate: Realigning the Global Financial Architecture – PART I – October 2023.
• United Nations — World Economic Situation and Prospect (WESP) report – January 2024.
• World Bank — Global Economic Prospects – June 2023, January 2024.

 

Coming soon:

OUTLOOK 2024:  3RD CONSECUTIVE YEAR OF DECELERATING GLOBAL ECONOMIC GROWTH   (PART II)