A statement issued by S&P Global Market Intelligence executive director for economic research Sara Johnson on Wednesday forecast 1.9% world real gross domestic product (GDP) in 2023, a rate that falls short of potential but averts a global recession.

  • Sees an acceleration in mainland China and sustained moderate growth in the emerging markets
  • Sees global growth of 3.0% in both 2024 and 2025.

Monetary tightening will succeed in slowing inflation rates, which in turn will allow for interest rates to decline

  • sees further deceleration led by goods prices
  • expects global inflation at 4.5% y.y in June this year, to 3.6% in December 2023
  • “Many of the forces that fuelled inflation have reversed, including lockdowns and supply disruptions during the Covid-19 pandemic, extraordinary fiscal and monetary stimuli, and shifts in the composition of consumer spending”
  • declines in industrial commodity prices are now moving downstream to intermediate and finished goods prices

On the US:

  • declines in retail sales and industrial production in November and December suggest the economy is on a downward trajectory heading into 2023.
  • recession in the first two quarters of 2023 led by an inventory drawdown and declines in residential investment, commercial construction, and consumer spending on goods
  • Several forces will limit the severity of the recession — household finances are in good shape, automotive production will increase as microprocessor supplies recover, and dollar depreciation will support net exports.