Global Economic Growth Could Slowdown in 2023, Rebound in 2024
Global growth is projected to decline from 3.4% in 2022 to 2.9% in 2023 and then rebound to 3.1% in 2024, forecasts the International Monetary Fund (IMF). The Bank of Mexico (Banxico) reports that economic growth in 2023 and 2024 would be lower due to a deterioration in expectations for US industrial activity.
The balance of risks remains tilted downward but adverse risks have moderated since October 2022, according to a recent report by the IMF. Compared with the IMF's October forecast, the estimate for 2022 and the forecast for 2023 are higher by about 0.2 percentage points, reflecting positive surprises and greater-than-expected resilience in numerous economies. Growth is expected to pick up in 2024, reflecting a gradual recovery from the effects of the war in Ukraine and subsiding inflation.
Following global demand, world trade growth is expected to decline in 2023 to 2.4%, despite easing supply bottlenecks, before rising to 3.4% in 2024. "These forecasts are based on a number of assumptions, including on fuel and non-fuel commodity prices, which have generally been revised down since October, and on interest rates, which have been revised up," reads the report.
For developed economies worldwide, growth is projected to decline sharply from 2.7% in 2022 to 1.2% in 2023 before rising to 1.4% in 2024, with a downward revision of 0.2 percentage points for 2024. For emerging markets and developing economies, growth is projected to increase modestly, from 3.9% in 2022 to 4.0% in 2023 and 4.2% in 2024, with an upward revision of 0.3 percentage points for 2023 and a downward revision of 0.1 percentage points for 2024.
In Latin America and the Caribbean, growth is projected to decline from 3.9% in 2022 to 1.8% in 2023, with an upward revision for 2023 of 0.1 percentage points since October. The forecast revision reflects upgrades of 0.2 percentage points for Brazil and 0.5 percentage points for Mexico due to unexpected domestic demand resilience, higher-than-expected growth in major trading partner economies and Brazil's greater-than-expected fiscal support.
In Mexico, Victoria Rodríguez Ceja, Governor, Banxico, reported that economic growth in 2023 and 2024 would be lower due to a deterioration in expectations for US industrial activity. "For 2023, GDP growth is expected to be between 0.8% and 2.4%, with a central estimate of 1.6%," said Rodríguez during the October-December 2022 Quarterly Report presentation. For 2024, the central bank expects the Mexican economy to grow between 0.8% and 2.8%, with a central estimate of 1.8%.