Global Outlook - Chapter 1 - Global economic growth and inflation outlook (2021-2023)

Jul 19, 2026

Upload by Skyler

Global growth rebounded to an estimated 5.5 percent in 2021, but is projected to decelerate sharply to 4.1 percent in 2022 and further to 3.2 percent in 2023. The outlook reflects renewed COVID-19 flare-ups, reduced fiscal support, and persistent supply bottlenecks, alongside higher inflation driven by food and energy prices and disruptions. In EMDEs, recovery remains well below pre-pandemic trends due to weaker vaccination, tighter policies, and lasting pandemic scarring, with heightened downside risks and the potential for hard landings. Strengthening cooperation on vaccines, debt sustainability, and climate-change mitigation is emphasized.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages46

Reading Time1 h 56 min

Global Outlook

Near-term growth slowdown and inflation risks

EMDE recovery gaps and policy constraints

Downside risks and global cooperation priorities

CHAPTER 1 GLOBAL OUTLOOK Public Disclosure Authorized Public Disclosure Authorized Pub lic Disc losure Authorized After rebounding to an estimated 5.5 percent in 2021, global growth is expected to decelerate markedly to 4.1 percent in 2022, reflecting continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. The near-term outlook for global growth is somewhat weaker, and for global inflation notably higher, than previously envisioned, owing to pandemic resurgence, higher food and energy prices, and more pernicious supply disruptions. Global growth is projected to soften further to 3.2 percent in 2023, as pent-up demand wanes and supportive macroeconomic policies continue to be unwound. Although output and investment in advanced economies are projected to return topre-pandemic trends next year, in emerging market and developing economies (EMDEs)—particularly in small states and fragile and conflict-afflicted countries—they will remain markedly below, owing to lower vaccination rates, tighter fiscal and monetary policies, and more persistent scarring from the pandemic. Various downside risks cloud the outlook, including simultaneous Omicron-driven economic disruptions, further supply bottlenecks, a de-anchoring of inflation expectations, financial stress, climate-related disasters, anda weakening of long-term growth drivers. As EMDEs have limited policy space to provide additional support if needed, these downside risks heighten the possibility of a hard landing. This underscores the importance of strengthening global cooperation to foster rapid and equitable vaccine distribution, calibrate health and economic policies, enhance debt sustainability in the poorest countries, and tackle the mounting costs of climate change. EMDE policy makers also face the challenges of heightened inflationary pressures, spillovers from prospective advanced-economy monetary tightening, and constrained fiscal space. Despite budgetary consolidation, debt levels—which are already at record highs in many EMDEs—are likely to rise further owing to sustained revenue weakness. Over the longer term, EMDEs will need to buttress growth by pursuing decisive policy actions, including reforms that mitigate vulnerabilities to commodity shocks, reduce income and gender inequality, and enhance preparedness for health-and climate-related crises. 􀀃􀀄􀀅􀀅􀀆􀀇􀀈 Global growth is estimated to have surged to 5.5 percent in 2021—its strongest post-recession pace in 80 years, as a relaxation of pandemic-related lockdowns in many countries helped boost demand. Notwithstanding this annual increase, resurgences of the COVID-19 pandemic and widespread supply bottlenecks weighed appreciably on global activity in the second half of last year. Moreover, emerging market and developing economies (EMDEs) are experiencing notably weaker and more fragile recoveries compared to those in advanced economies as a result of slower vaccination progress, a more limited policy response, and the pandemic’s scarring effects (figure 1.1.A) . In particular, these scarring effects on potential output reflect the pandemic’s adverse impact on EMDE physical and human capital. Among the most vulnerable countries, the impact of the pandemic will reverse several years of income gains. Note: This chapter was prepared by Carlos Arteta, Justin-Damien Guénette, Lucia Quaglietti, and Collette Wheeler, with contributions from Jongrim Ha, Osamu Inami, Sergiy Kasyanenko, Peter Nagle, and Ekaterine Vashakmadze. Global COVID-19 infection rates have soared, driven by the rapid spread of the Omicron variant. Advanced economies and a growing number of EMDEs have fully vaccinated a majority of their populations. But despite expansive vaccine coverage, some countries have been forced toreintroduce strict lockdown measures recently to alleviate acute pressures on their health systems. Vaccine coverage remains highly uneven around the world, and stubbornly limited across lowinc

FAQs

How is global growth expected to change from 2021 to 2023?

Global growth is expected to slow from an estimated 5.5% in 2021 to 4.1% in 2022, then to 3.2% in 2023.

What factors are driving higher inflation and weaker growth in the near term?

The chapter points to COVID-19 resurgence, higher food and energy prices, diminished fiscal support, and more severe supply disruptions.

Why is the recovery weaker in emerging market and developing economies (EMDEs)?

EMDE recoveries are dampened by lower vaccination rates, tighter fiscal and monetary policies, limited policy space, revenue weakness, and persistent scarring to output potential and investment.

Jul 19, 2026

Upload by Skyler