Inflation Peaking amid Low Growth

World Economic Outlook, January 2023

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The World Economic Outlook Update will be released in Singapore at 9:30 am on January 31, 2023 (January 30 at 8:30 pm Washington D.C. time)

Global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then rise to 3.1 percent in 2024.
The forecast for 2023 is 0.2 percentage point higher than predicted in the October 2022 World Economic Outlook (WEO).
The 2023 forecast is below the historical (2000–19) average of 3.8 percent.
Global inflation is expected to fall from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024.
Global inflation in 2024 is expected to remain above pre-pandemic (2017–19) levels of about 3.5 percent.

The rise in central bank rates to fight inflation and Russia’s war in Ukraine continue to weigh on economic activity.
The rapid spread of COVID-19 in China dampened growth in 2022, but the recent reopening has paved the way for a faster-than-expected recovery.

The balance of risks remains tilted to the downside, but adverse risks have moderated since the October 2022 WEO.
Upside scenarios:
- A stronger boost from pent-up demand in numerous economies.
- A faster fall in inflation.
Downside scenarios:
- Severe health outcomes in China could hold back the recovery.
- Russia’s war in Ukraine could escalate.
- Tighter global financing costs could worsen debt distress.
- Financial markets could suddenly reprice in response to adverse inflation news.
- Further geopolitical fragmentation could hamper economic progress.

Priority in most economies: achieving sustained disinflation amid the cost-of-living crisis.
With tighter monetary conditions and lower growth potentially affecting financial and debt stability:
- Deploy macroprudential tools.
- Strengthen debt restructuring frameworks.
Accelerate COVID-19 vaccinations in China to safeguard the recovery and generate positive cross-border spillovers.
Fiscal measures:
- Target fiscal support at those most affected by elevated food and energy prices.
- Withdraw broad-based fiscal relief measures.
Strengthen multilateral cooperation to:
- Preserve the gains from the rules-based multilateral system.
- Mitigate climate change by limiting emissions and raising green investment.

Source: World Economic Outlook Update — Inflation Peaking amid Low Growth (January 2023).