World Economic Prospects: Softer outlook brings the rate hiking cycle to a close

Sep/Oct 2023

Each month Oxford Economics’ team of 300 economists and analysts updates our baseline forecast for 200+ countries using our innovative Global Economic Model. Fully linking individual country models through global assumptions about trade volume and prices, competitiveness, capital flows, interest and exchange rates, and commodity prices, our model provides a rigorous and consistent structure for forecasting and understanding the impact of economic shocks. Below is just the top-level summary of our analysis of the latest economic developments.

• We’ve nudged up our 2023 GDP growth forecast by 0.1ppt to 2.5% due to Q2 outturns that were stronger than we’d expected. However, we still expect lacklustre growth over the remainder of this year and most of 2024.
• At 2%, world growth next year is expected to be the weakest since the global financial crisis, excluding the coronavirus pandemic-driven downturn in 2020.
• After rising above the 50 no-change threshold in early 2023, the JP Morgan global composite PMI has since reversed most of its gains and fell to just 50.6 in August.
• The ongoing downturn broadly supports our view that after a healthy H1 2023, global growth has likely slowed in Q3 and may continue to lose steam in Q4.

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