World Economic Outlook, October 2023: Navigating Global Divergences
World Economic Outlook, October 2023
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- Canonical URL
- World Economic Outlook, October 2023: Navigating Global Divergences
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Bibliographic details
- Published: October 10, 2023
Global outlook and headline forecasts
- Baseline forecast: global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, well below the historical (2000–19) average of 3.8 percent.
- Advanced economies: expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite.
- Emerging market and developing economies: projected to have a modest decline in growth from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024.
- Global inflation: forecast to decline from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices.
- Core inflation: generally projected to decline more gradually; inflation is not expected to return to target until 2025 in most cases.
- Risk assessment: risks are more balanced than earlier in the year given reduced banking sector stress, but remain tilted to the downside, implying little margin for policy errors.
Chapter 1 — Global Prospects and Policies: key findings and policy implications
- Divergent growth prospects across the world’s regions pose a challenge to returning to prepandemic output trends.
- Policy tightening to reduce inflation is expected to cool economic activity going forward despite signs of resilience earlier in 2023.
- Swiss and US authorities’ decisive actions to contain financial turbulence have helped rebalance risks, but downside tilt remains.
- Policy recommendations:
- Monetary policy should stay the course to bring inflation to target.
- Fiscal consolidation is needed to tackle soaring debts.
- Structural reforms are crucial to revive medium-term growth prospects amid constrained policy space.
- Accelerate the green transition, increase resilience to climate shocks, and improve food security through strengthened multilateral frameworks and adherence to rules-based platforms for international cooperation.
Chapter 2 — Managing Expectations: Inflation and Monetary Policy
- Inflation reached multidecade highs in 2022; headline inflation has come down but core measures are proving stickier.
- The high inflation experience of the last two years could engender persistently high inflation expectations, complicating central banks’ paths to getting inflation back to their targets.
- Empirical findings:
- Recent developments in inflation expectations vary across economies, agents, and horizons.
- An increasing role of near-term inflation expectations for inflation dynamics is uncovered.
- Inflationary supply shocks are long-lasting and monetary policy is less effective when expectations are backward-looking.
- Policy implication: Improvements in monetary policy frameworks, including communication strategies, can better inform agents’ expectations and bring inflation back to target more quickly and at a lower output cost, complementing standard cyclical policies.
Chapter 3 — Fragmentation and Commodity Markets: Vulnerabilities and Risks
- Context: Russia’s invasion of Ukraine caused major commodity markets to fragment; geopolitical tensions could exacerbate fragmentation.
- Four principal conclusions:
1. Commodities are particularly vulnerable to fragmentation due to concentrated production, hard-to-substitute consumption, and their critical role for technologies. 2. Further fragmentation would cause large swings in commodity prices and more volatility. 3. Commodity trade disruptions would have highly uneven impacts across countries, though global losses appear moderate given offsetting effects across countries; low-income countries would bear a disproportionate share of the economic cost, due to their high reliance on agricultural imports. 4. Fragmented minerals markets would make the energy transition more costly, reducing investment in renewables and electric vehicles by one-third by 2030 in an illustrative scenario.
- Policy proposals:
- A green corridor agreement could guarantee the international flow of critical minerals.
- Similar agreements for essential food commodities could stabilize agricultural markets and safeguard the global goals of averting climate change and food insecurity.
Communication and dissemination
- Supporting materials and tools noted on the page include: Full Report, Executive Summary, Foreword, Blog by Pierre-Olivier Gourinchas, October 2023 Database, Press Conference, Chapters and Chapter Data, Statistical Appendix, DataMapper, Data Tools, Videos, and Online Annexes.
Source: World Economic Outlook, October 2023: Navigating Global Divergences (Overview page).
Content in this bundle
- ch1
- Chapter 1 Online Annex
- Chapter 2
- Chapter 2 Online Annex
- Chapter 3
- Chapter 3 Online Annex
- Commodity Special Feature
- Executive Summary
- Foreword
- Statistical Appendix
- Table a
- Table b
- Full Report
References
- DataMapper
- Blog by Pierre-Olivier Gourinchas
- October 2023 Database
- Press Conference
- Chapter 1 Data
- https://origin-blogs.imf.org/en/blogs/articles/2023/10/04/how-managing-inflation-expectations-can-help-economies-achieve-a-softer-landing
- Chapter 2 Data
- Replay the Event
- https://origin-blogs.imf.org/en/blogs/articles/2023/10/03/geoeconomic-fragmentation-threatens-food-security-and-clean-energy-transition
- Chapter 3 Data
- Replay the Event