Monetary policy should stay the course to bring inflation to target, while fiscal consolidation is needed to tackle soaring debts. While risks to the outlook are more balanced than earlier in the year, on account of Swiss and US authorities’ having acted decisively to contain financial turbulence, they remain tilted to the downside, implying little margin for policy errors. Despite signs of resilience earlier in 2023, the impact of policy tightening to reduce inflation is expected to cool economic activity going forward. Given increasing concerns about geoeconomic fragmentation, Chapter 3 assesses how disruptions to global trade in commodities can affect commodity prices, economic activity, and the green energy transition.ĭivergent growth prospects across the world’s regions pose a challenge to returning to prepandemic output trends.

It emphasizes the complementary role of monetary policy frameworks, including communication strategies, in helping achieve disinflation at a lower cost to output through managing agents’ inflation expectations. Chapter 2 documents recent trends in inflation expectations at near- and medium-term horizons and across agents. Monetary policy actions and frameworks are key at the current juncture to keep inflation expectations anchored. Core inflation is generally projected to decline more gradually, and inflation is not expected to return to target until 2025 in most cases. Global inflation is forecast to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices. Emerging market and developing economies are projected to have a modest decline in growth from 4.1 percent in 2022 to 4.0 percent in both 20. Advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite. The baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, well below the historical (2000–19) average of 3.8 percent.

World map outline pdf