International economic outlook: March 2023

Summary

Forecast Changes

• The outlook for global activity continues to improve. We now forecast global GDP growth of 2.2% for this year (up from 2.0% a month ago), implying that we no longer forecast the global economy to slip into recession in 2023. Among the countries and regions we have revised our 2023 GDP growth outlook higher over the past month are the U.S. (to 1.0%), China (to 5.5%), and the Eurozone (to 0.3%).

• We have made modest changes to our outlook for near-term central bank tightening. We lifted our forecast policy rate peak for the U.K., Switzerland and Norway higher to 4.50%, 1.75% and 3.50% respectively. In contrast, among the central banks we forecast a lower policy rate peak for are Australia (3.60%), New Zealand (5.25%) and Sweden (3.25%). Overall, we see global tightening ending in H1-2023, and also forecast earlier and faster monetary easing from select central banks starting in late 2023.

• We forecast a modestly softer U.S. dollar than previously, and forecast the trade-weighted dollar against the advanced foreign economies to depreciate by 3% by the end of 2023 and a further 5% in 2024. As for the individual foreign currencies, we forecast a stronger euro, yen and pound than previously, while we expect the Brazilian real and Chilean peso to rebound from recent weakness over time.