Global inflation is forecast to decline steadily, to 6.9 percent in 2023 (from 8.7 percent in 2022) and 5.8 percent in 2024, due to tighter monetary policy aided by lower global commodity prices (see Chart 2). Core inflation (which excludes food- and energy-related costs) is generally expected to decrease more gradually and in most cases inflation is not expected to return closer to 2 percent until 2025. Monetary policy actions and frameworks are significant driving forces at the moment to keep inflation expectations anchored, as reflected in the tightening of monetary policy across many countries – developed and developing.
Real GDP growth (percent change)
e estimate f forecast
Emerging and developing economies Advanced economies World
10
5
Economic driving forces Looking at the major economic
0
indicators, and taking on board the IMF’s forecasts and expectations, the OPEC Fund is cautiously more optimistic for an improvement in headline growth next year given the following: • Economic growth is expected to benefit from an acceleration of the digital transformation along with advances in artificial intelligence, innovation, 5G, technology and biotechnology. These are likely to accelerate across some countries and many industries, driving productivity gains and reshaping labor markets. • As countries intensify their efforts to tackle climate change , investment into renewable energy will continue to grow. Allied to this, an increased focus on environmental, social and governance (ESG) fundamentals will help to underpin sustainable growth in partner countries. • Many governments will continue to implement fiscal stimulus measures to support businesses and individuals affected by the cost-of-living crisis and lingering effects from the pandemic. • Following the lead of the US Federal Reserve, some central banks may hold interest rates at current levels, which could indicate forthcoming cuts that signal a normalization of the interest rate environment across many economies. • Reforms will remain an important element in building the foundations for sustainable growth. • Efforts to create more resilient supply
-5
2020 2021
2022 2023e 2024f
2025f
2026f
Source: IMF
chains (such as through near-shoring) will continue, with diversification and local production playing a role in reducing vulnerabilities to supply chain disruptions. • Finally, demographic change will continue to have a large effect: aging and shrinking populations in some developed countries are lowering demand but this will be offset to some degree by growth of the middle class and of populations overall in emerging economies. Risks to the outlook Despite the more optimistic outlook for growth next year, there are several risks that could undermine the growth picture: • Trade tensions between major economies like the US and China could persist, leading to potential disruptions in global supply chains and trade patterns. • Geopolitical risks, political developments , war, resource scarcity and sanctions could further impact
global stability and trade. • If inflation remains entrenched, central banks’ monetary policies will remain tighter for longer, constraining growth. • Cybersecurity , data breaches and misconduct will have far-reaching adverse economic and financial consequences. • Efforts to reduce carbon emissions, switch to renewable energy sources and adapt to the effects of climate change may be more urgent and costly than expected, stretching resources and straining national budgets. • Healthcare infrastructure and international cooperation could still be tested with the emergence of new pandemics. External environment: Challenges and opportunities The OPEC Fund and its partner countries are facing a changing external environment – one where rapid and sometimes unforeseen developments are
18
Powered by FlippingBook