Quarterly Edition: Gentle Step Down in Global Growth

As we put the data finishing touches on 2023 and focus on 2024, an encouraging picture emerges at the global level. The world economy grew an estimated 3.1% last year (PPP weights), slower than the 3.5% advance in 2022 but much better than initially anticipated. Given elevated interest rates, this degree of resilience is notable indeed.

The world’s three largest economies had much to do with this. Bucking earlier expectations of a slowdown, US growth actually improved last year thanks to resilient consumers, a big boost from government spending, and less drag from foreign trade. The economy resultingly expanded by 2.5% in 2023, well ahead of prior year’s 1.9% gain. Meanwhile, on the heels of a much-delayed re-opening, the Chinese economy grew 5.2%, far ahead of the 3.0% increase in 2022. In Japan, growth nearly doubled to 1.9% as much better trade and investment outcomes offset softer consumer spending. Elsewhere, the performance was much less impressive. In Europe, the delayed impact of high inflation and rising interest rates undermined both consumer spending and fixed investment and brought performance to a near standstill both in the UK and the eurozone. Outside of China, the rest of the emerging market universe had a widely varied performance. Resilience in counties like India, Mexico, and Indonesia was countered by notable deceleration in Poland, Colombia, and Malaysia, among others.