Economic forecasting is an extremely difficult process, particularly when it involves makin​​​​​​​g predictions about the economic performance of the world economy, but organisations such as the IMF, OECD a​​​​​​​nd the World Bank, along with major financial institutions such as multinational investment banks do take a global view when they are producing economic forecasts.

Global forecasts are useful because they give economists, governments and business people a guide to the world's economic prospects as well as an indication of how individual countries and markets might perform from a world perspective.

This is a view of the forecasts made for the world economy in 2023 based on the different macroeconomic objectives:

• The overall forecast for economic growth will be lower in 2023 than it was in 2022 at around 2.7%, slowing from 6.0 % in 2021 and 3.2% in 2022 (IMF). One of the key reasons for slowing economic growth is rising interest in so many countries as central banks try to combat rising inflation.
• Global inflation is expected to fall in 2023 from a high of 8.8% in 2022 to 5.7% in 2023 (OECD). This is partly the result of tightening monetary policy, easing conditions in global supply chains and fal​​​​​​​ling commodity prices.
• Unemployment in many regions in the world is ‘expected to rise in 2023 as economic growth slows but the rise in unemployment will not be as significant as previous recessions as many countries are experiencing shortages of labour’ (JP Morgan).  
• There is expected to be ‘rising income inequality in the world economy in 2023 as slowing economic growth adversely affects ELDCs’ (World Bank).

Economic forecasting, particularly at a global level, is extremely difficult because the future is unce​​​​​​​rtain. Any forecasts made 12 months ago would not have included the conflict in Ukraine and the resulting impact this has had on global energy prices and the resulting inflation. There are also so many variables that affect macroeconomic forecasts that even the most sophisticated computer models struggle to deal with them. The global nature of world economic data means there will always be significant disparities between regions and countries in any forecasts.

Possible questions to discuss with a class 

1. Why are economic forecasts useful to different stakeholders?

2. What are the positives and negatives for the global economy in 2023?

3. Discuss the usefulness of world economic forecasts.

Sources

https://www.worldbank.org

https://www.jpmorgan.com

https://www.oecd.org

https://www.imf.org