Global Macroeconomic Outlook – Q2 2023 Update

Global Macroeconomic Outlook Report Overview

According to GlobalData, major economies, such as the US, and Europe is expected to witness an economic slowdown in 2023. The key global macroeconomic issues during the year include the impact of the Russia-Ukraine war, inflation, a hike in policy rates, and rising unemployment rates. To depict the impact of these key issues on global and regional growth prospects, the report discusses the future trends in key macroeconomic areas, including real GDP growth, inflation, manufacturing, labor market, international trade, public finance, and stock and capital markets for major economies, along with the impact of the Russia-Ukraine war.

The global macroeconomic outlook report for Q2 2023 identifies, analyzes, and forecasts key development of the global economy. The report provides a 360-degree view of the economy which can be used as a strategic tool to understand market dynamics, business potential, and the direction of operations.

Russia-Ukraine War and its Impact on the Global Economy

The ongoing conflict between Russia and Ukraine is a significant geopolitical risk that has the potential to impact the global economy and political stability. The sectors impacted by the Russia-Ukraine war are oil & gas, aerospace, defense & security, technology, banking & payments, and tourism among others.

The fact that the US was willing to meet Putin in December 2022 for a diplomatic solution, indicates that there is a recognition of the importance of finding a peaceful resolution to the conflict. However, the refusal of Western nations to recognize the new territories, which were seized from Ukraine, has been a major obstacle in reaching a resolution.

Key Macroeconomic Indicators Outlook

In 2023, major economies are forecast to experience a slowdown due to strict monetary policy to control high inflation, triggered by the ongoing conflict between Russia and Ukraine since the war continues to create high uncertainty across the globe, according to GlobalData. The slowdown in most of the Europe, Americas, and MEA regions will result in the global economy growing at a slower pace of more than 2% in 2023. The global economy is expected to expand in 2024, supported by easing inflation and supply-side constraints.

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Inflation Rate Forecast

Global headline inflation is projected to ease in 2023, due to a decline in energy prices and the impact of the tighter monetary policy rate. According to the World Bank, the price of energy is forecast to decline by 11% in 2023, as a decrease in demand due to an uncertain economic outlook would ease the demand for energy price. The supply chain system is expected to get better with the lifting of the zero-COVID policy in China. However, the Russia-Ukraine war continues to be a major challenge for the global economy as it continues to disrupt the supply chain and trade prospects. 

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Global Economic Outlook

The year 2023 will be challenging for a large portion of the global economy as the primary drivers of growth — the Euro area, and the US are all going through a time of acute weakness, and repercussions of these are making other challenges facing the emerging market and developing countries (EMDEs) worse.

Downside risk for the global economy remains in the form of elevated inflation, tight monetary conditions, financial strain, further weakening in key economies, or escalating geopolitical tensions. As a result of increased borrowing rates on funds to fight inflation, business sentiment may remain subdued.

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Key Highlights

• The global economy is slowly recovering from the impacts of the pandemic and the Russo-Ukrainian war.
• China is rebounding strongly as its economy reopens, and supply-chain disruptions begin to unwind.
• The tightening of monetary policy by most central banks is expected to bear fruit with inflation moving back gradually.
• GlobalData projects the global economy to decelerate in 2023, but at a slower pace than previously anticipated.

Reasons to Buy

GlobalData’s Global Macroeconomic Country Outlook Report identifies, analyzes, and forecasts key development of the global economy. The report provides a 360-degree view of the economy which can be used as a strategic tool to understand market dynamics, business potential, and the direction of operations.