World Economic Outlook
World economy, which has been recovering from the Covid-19 pandemic and Russia-Ukraine war is projected to slowdown with World economic growth projected by IMF to decelerate from 3.5% in 2022 to 3.0% in 2023 and 2.9% in 2024 (See Table).
The slowdown is mainly in the Advanced economies and that too in the European countries with the growth of Euro area and UK projected to decelerate from 3.3% and 4.1% respectively in 2022 to 0.7% and 0.5% respectively in 2023.
While the growth of advanced countries is projected to slowdown from 2.6% in 2022 to 1.5 % in 2023, the growth of Emerging Market and Developing economies is projected to be only a tad lower at 4.0% in 2023 compared to 4.1% in 2022.
India which has been a star performer with 7.2% growth in 2022 is projected to grow at 6.3% in both 2023 and 2024 which is one of the highest among the major developed and developing countries.
China’s growth is projected to pick up from 3.0% in 2022 to 5.0% in 2023, but decelerate to 4.2% in 2024 with the real estate downturn looming large.
The growth of ASEAN-5 has also moderated from 5.5% in 2022 to 4.2% in 2023.
While there is a slowdown in global economic growth in 2023 as stated in the IMF’s World Economic Outlook , October 2023, ‘a contraction in global per capita real GDP -which often happens in a global recession – is not part of the baseline scenario’.
But what is really worrying for us is that World Trade Volume (goods & services) growth is projected to decelerate sharply from 5.1% in 2022 to 0.9% in 2023.
The deceleration in World Trade Volume growth is contributed by the deceleration in both import and export growth of advanced countries, and Emerging market and developing economies.
In the case of Advanced economies’ import and export growth, the former is projected to decelerate from 6.7% in 2022 to 0.1% in 2023,and the latter from 5.3% in 2022 to 1.8% in 2023.
In the case of Emerging market and developing economies, import growth is projected to decelerate from 3.2% in 2022 to 1.7% in 2023, and exports is projected to actually fall though marginally by 0.1% in 2023 compared to its growth of 4.1% in 2022.
With Services growth projected to be weaker and recovery in Tourism maturing, growth in services trade is also expected to be slower.
Another downside risk is the Oil price which has fallen at present, but could rebound if the war in Gaza were to continue for a long time.
