The forecasted global real GDP growth in 2023 is expected to be 2.3%, down from the actual increase of 3.3% in 2022. The major regions experiencing weakness will be Europe, Latin America, and the US. But the Asian economies are expected to drive most of the global growth in 2023. They will benefit from the ongoing reopening dynamics and face less intense inflationary pressures compared to other regions.
Despite efforts to tighten monetary policies, inflation remains persistent in many key economies, particularly due to strong job markets and severe labor shortages. As a result, monetary policy will probably continue to be tight for the majority of 2023, notwithstanding worries about financial stability. Tight monetary control restrains economic growth and is anticipated to raise unemployment rates, particularly in Europe and the US.
The global real GDP growth is anticipated to gain momentum in 2024, reaching 2.5 percent. The growth will be more evenly distributed among regions. In 2024, the positive factors contributing to growth will mainly come from the fading shocks related to the pandemic, elevated inflation, and the tightening of monetary policy. However, growth rates in 2024 and beyond are expected to be lower than the pre-pandemic trend due to ongoing supply-side weaknesses such as aging demographics worldwide and slow productivity growth. Inflation, while lower than the current levels, may remain relatively high due to factors such as persistent labor shortages, deglobalization, and the global energy transition.
Looking at the 10-year economic outlook, businesses should prepare for a prolonged period of disruptions and uncertainties. However, amidst these challenges, there are also opportunities. Global growth will continue to slow once the regional recessions of 2022-2023 come to an end. Mature markets will make smaller contributions to global GDP over the next decade. Nevertheless, there are still opportunities for firms to invest in both mature and emerging markets. Mature markets offer opportunities due to their wealth and the need for innovation to compensate for shrinking labor forces. Emerging markets provide prospects for investment in physical and digital infrastructure to support their large and young labor forces. To ensure long-term growth, key strategies include developing new lines of business, strengthening corporate culture, embracing digital transformation and automation, recruiting talent with new skills, and maximizing the hybrid work model where appropriate.
