Key Findings
Gradual improvements but fragile outlook
The global economic outlook slightly improved based on Q3 forecasts but sits far behind long-term growth trends. Labour markets and the services sector prove resilient, showing optimistic signs ahead.
But lingering inflation and the lagged effect of high borrowing costs will dampen economic prospects in 2024.
Weak growth expected in the US and Eurozone
The US and Eurozone will record weak growth in 2023.
Despite headwinds, real GDP is expected to remain slow at 1.2% in the US and 0.6% in the Eurozone; though, subtly increasing from Q2 estimations of 0.9% and 0.5%, respectively. But these projections are behind historical economic performance for each region.
The US has repeatedly surprised to the upside and pulled ahead of the Eurozone after both economies saw a 0.2% growth forecast in Q1.
Emerging markets outperform advanced economies
Emerging markets remain the growth engine of the global economy this year, registering a 3.9% increase in real GDP compared to 1.0% for advanced markets.
Asia Pacific is at the centre of this surge. China, India, the Philippines and Vietnam will grow more than 5% each this year.
China remains a key driver of the global economy. But the country’s slowed post-pandemic recovery and deepening real estate woes raise concerns about sustained momentum into 2024.
Global Consumer Price Inflation Baseline Forecast 2023-2024
Source: Euromonitor International Macro Model
Notes: Data from 2023 onwards are forecasts, updated July 2023. Regional aggregates calculated using PPP weights.
Global inflation slows but at different speeds across markets
Global inflation will continue to decelerate from 9.0% in 2022 to 7.0% in 2023.
Declines in demand and stagnant economic activity are easing inflationary pressures. At the same time, commodity prices in food and energy, resulting from the war in Ukraine, have been further abating.
However, the Q3 global inflation forecast increased 0.1 percentage point compared to Q2 and is still significantly higher relative to the historical trend. Tighter monetary policies should be expected as a result to help combat elevated price pressures.
Diverging trends are apparent between economies. Brazil and Spain, for example, saw inflation fall below their central banks’ targets in June to 3.2% and 1.6%, respectively. But inflation in the UK remained persistently high at 7.3%. Inflation is now primarily driven by factors like wage growth and a surge in demand for services, which are stronger in some markets than others.
Inflation is set to slow in 2024 from high interest rates globally and cooling economic activity.
Not to be distributed without permission. The data included in this report is accurate according to Euromonitor International at the time of publication in July 2023.