The global economy has moderate prospects for 2022, 2023 and 2024, according to projections by the European Central Bank (ECB).
The ECB expects global real GDP (excluding the euro area) to increase 2.9% in 2022, then 3% in 2023, and finally 3.4% in 2024.
This outlook is worse than indicated in the June 2022 Eurosystem staff projections and implies that the pace of progress of the world economy will be slightly below its long-term average this year and next, in an environment of slowing economic activity in both advanced and emerging economies.
In particular, high inflation, tightening financial conditions and the persistence of adverse supply-side factors are negatively impacting economic activity around the world.
Survey data point to a generalized moderation in economic activity.
While weaker demand prospects and improvements in supply have helped to alleviate supply chain pressures, these still persist.
In line with the outlook for global growth, the outlook for world trade and euro area external demand has also deteriorated compared to June’s projections.
At the same time, the ECB sees global inflationary pressures remaining elevated and widespread in a context of rising commodity prices, persistent supply constraints, still relatively robust demand and tight labor markets, but they are expected to ease as commodity markets stabilize and growth weakens.
In an environment of considerable uncertainty, the balance of risks around the baseline projections is tilted to the downside for global growth and to the upside for headline inflation.
The euro area economy grew 0.8% in 2Q2022, mainly due to strong consumer spending on services requiring greater social interaction, as a result of the withdrawal of pandemic-related restrictions.
During the summer, as citizens traveled more, countries with significant tourism sectors especially benefited.
Meanwhile, businesses have been affected by high energy costs and continuing supply bottlenecks, although these have been gradually easing.