2023 Outlook

As multiple shocks weigh on the global economy, global trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023. Economists now predict that global merchandise trade volumes will grow by 3.5% in 2022, up from 3.0% in April. However, they predict a 1.0% increase in 2023, a significant decrease from the previous estimate of 3.4%.

April 2023

Our data shows that a global recession will likely lead to lower growth, inflation, and corporate profits. However, the recession is projected to be brief, and prospects for economies and markets are likely to improve following a rocky start to the new year. A significant downside for credit and equities is inevitable before a durable recovery takes hold, but economic and market prospects appear to be down but not out.

The ongoing war between Russia and Ukraine has been a major concern for the global economy and the situation is expected to remain so for the next few years. Although there have been some positive signs of improvement, the overall recovery is expected to be slow and steady. The uncertainty and instability generated by the war could have a significant negative impact on economic activity. Furthermore, the trade tensions between various countries are already high and there is potential for further escalation.

In addition to the geopolitical factors, there are also concerns about the financial vulnerabilities in various sectors of the economy. Financial institutions, housing markets, and low-income countries are particularly vulnerable to economic shocks. This could further complicate the recovery process and prolong the period of economic uncertainty.

Despite the recent decline in headline inflation, the situation still remains a cause for concern. The inflation rate is still higher than normal and could remain so for a longer period of time. This could further add to the economic challenges faced by various countries.

In conclusion, while there are some positive signs of improvement, the global economic outlook remains fragile and uncertain. The ongoing geopolitical tensions and financial vulnerabilities could further complicate the situation and lead to a slower recovery than anticipated.

GDP

Global growth slowed down significantly in 2022, falling to just 3.2% - over 1 percentage point lower than what was expected at the end of 2021. Unfortunately, this slowdown can be attributed to Russia's ongoing war of aggression in Ukraine, as well as the significant cost-of-living crisis that has impacted many countries across the globe. As we look ahead to the future, it appears that growth will continue to remain at below-trend rates in 2023 and 2024, which could have far-reaching implications for the global economy as a whole. That being said, it's important to remember that there is always hope for improvement - and with the right policies and initiatives in place, we can work together to create a more prosperous future for all.

EN-Rectangle_Real GDP growth projections for 2023 and 2024.png

We compile outlooks on economic growth, unemployment, interest rates, and other topics to provide you with insight into the trends that will shape global economies and markets in 2023.

World Merchandise Trade Volume Analysis

World trade will lose momentum in the second half of this year and remain subdued in 2023, according to the updated outlook released by the World Trade Organization (WTO) earlier this month.

Middle East will have the strongest trade volume growth of any region in 2022 on both the export side (14.6%) and the import side (11.1%).

What to Watch in Global Trade in 2023

Global trade is expected to slow sharply in 2023, in line with slowing global economic growth. Although China will continue to drive some commodity demand, it will be less than in previous years, and Chinese imports of many consumer goods will not rebound quickly after 2022.

Global goods trade to shrink in 2023

Our baseline trade forecast resembles downturns seen in global recessionary years such as 1981, 1992, and 2001. One significant downside risk concerns investment, which is an import-intensive component of GDP. A much weaker investment outlook than our baseline would imply a much sharper drop in trade, as seen in 1975 and 2009.

Commercial Service Trade

Supported by a vigorous travel sector, a heightened demand for ICT services and a less constrained transport sector, global commercial services exports and imports are expected to expand by 7.5% and 9.2%, respectively, in 2022. Asia and the Pacific services trade also benefited from these trends, with regional exports and imports expected to grow above the global average at 8.7% and 9.8%, respectively.

Sharp, Long-lasting Slowdown to Hit Developing Countries Hard

According to the World Bank's newest Global Economic Prospects report, global growth is slowing rapidly due to soaring inflation, higher interest rates, less investment, and disruptions created by Russia's invasion of Ukraine.

Given the global economy's precarious state, any new negative development—such as higher-than-expected inflation, sharp rises in interest rates to curb it, a revival of the COVID-19 pandemic, or growing geopolitical tensions—could send it into recession. This would be the first time in over 80 years that two worldwide recessions occurred in the same decade.

The golabal economy is projected to grow

1.7%
2023

2.4%
2023

The sharp downturn of the economy;

95%
2023
Advanced Economies

70%
2023
Emerging Markets

Over the next two years, per-capita income growth in emerging market and developing economies;

2.8%
2023
Emerging Markets & Advanced Economies

46% of traders predicted 'Volatile markets' will be their greatest daily trading challenge in 2023. 'Liquidity availability' decreased in ranked importance from 35% to 22% in 2023.

53% of traders predicted 'Artificial Intelligence/ Machine Learning technology to be the most influential in shaping the future of trading over the next 3 years, with 'API Integration' and 'Blockchain/ Distributed Ledger Technology' following.

Excluding China, growth in emerging markets and developing economies is expected to decelerate from 3.8% in 2022 to 2.7% in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.

Over the 2022-2024 period, gross investment in these economies is likely to grow by about 3.5% on average—less than half the rate that prevailed in the previous two decades. The report lays out a menu of options for policy makers to accelerate investment growth.