New Delhi [India], April 25 : Global GDP growth is forecasted to slow from 3.0 per cent in 2022 to 2.3 per cent in 2023 and the slowdown is expected to be centred in Europe and the US regions where high inflation and monetary policy tightening through interest rate hikes are restraining consumer and business spending, according to S&P Global Market Intelligence's latest outlook.
The global financial market information and analytics services provider, however, said the reopening of mainland China's economy after Covid restrictions is providing some lift to the world economy.
For 2024, global growth, it said, should pick up to 2.7 per cent and 3.0 per cent in 2025.
"The global economy is performing better than anticipated when 2023 began... Mainland China, India and other emerging markets led the acceleration. Meanwhile, the United States and the eurozone appear to have dodged recessions," said Sara Johnson, Executive Director, of Economic Research, S&P Global Market Intelligence.
"Despite persistent inflation and tightening financial conditions, the global economic expansion will continue at a moderate pace. Near-term growth is dominated by service sectors that are enjoying renewed post-pandemic demand. Economic performance will vary widely across regions, with growth in Europe and the Americas experiencing subpar growth and emerging markets of Asia-Pacific and parts of Africa achieving robust growth."
On global inflation, it said it will likely slow from 7.6 per cent in 2022 to 5.7 per cent this year and 3.5 per cent in 2024. Inflation it said is on a downward path but underlying pressures persist.
With inflation rates still well above targets, it sees the US Federal Reserve and European Central Bank to tighten monetary policies in May and June, respectively.
"Policy rates will reach highs of 5.25 per cent in the United States, 4.50 per cent in the United Kingdom and 4.25 per cent in the eurozone (refinance rate) and hold at these levels throughout 2023. As inflation subsides, monetary easing in 2024-25 will bring these policy rates down to their long-run neutral levels in the range of 2.00 per cent to 2.75 per cent," it said.
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