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| International Economic Outlook: Forecasting Growth and Monetary Policy Changes |
According to the latest report from the international economic outlook, the global economy is showing signs of improvement. The report forecasts a global GDP growth rate of 2.2% for 2023, up from 2.0% projected last month. This revised forecast indicates that the global economy will not slip into recession this year. Several countries and regions, including the U.S., China, and the Eurozone, have seen their 2023 GDP growth outlooks revised higher over the past month.
The report also indicates that there have been some modest changes in the outlook for central bank tightening. The forecast policy rate peaks for the U.K., Switzerland, and Norway have been lifted higher to 4.50%, 1.75%, and 3.50%, respectively. On the other hand, the policy rate peaks for Australia, New Zealand, and Sweden have been lowered. Overall, the report forecasts global tightening to end in the first half of 2023, followed by earlier and faster monetary easing from select central banks starting in late 2023.
The report also predicts a modestly softer U.S. dollar, with the trade-weighted dollar against the advanced foreign economies expected to depreciate by 3% by the end of 2023 and a further 5% in 2024. The report forecasts a stronger euro, yen, and pound than previously, while the Brazilian real and Chilean peso are expected to rebound from recent weakness over time. The latest report provides a cautiously optimistic outlook for the global economy and monetary policy, with signs of improvement seen in several key regions.
