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Munich Re’s Economic Outlook 2023
High inflation and geopolitics to shape the global economy in 2023
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    The global economy in 2023 will be marked by high inflation and low growth. However, it will cope better than initially expected with the consequences of the war in Ukraine, sharp price increases and higher interest rates. This is the conclusion reached by Munich Re’s current Economic Outlook for 2023. 

    Economic growth in the eurozone and the USA will be weak in 2023. While inflation is falling in many industrialised countries, in the medium term it will remain higher than previous levels, overshooting the inflation targets set by the major central banks until at least 2024. The negative macroeconomic impact of high inflation on households’ real incomes will be mitigated by relatively stable labour markets and solid employment figures. 

    The key findings of the Economic Outlook produced by Munich Re’s Economic Research experts:

    • Global economic growth is expected to be relatively low in 2023, as suggested by leading economic indicators, though both the general mood and published economic data have improved somewhat in recent weeks.
    • In industrialised countries in particular, high inflation and falling real incomes are putting a noticeable strain on demand for consumer goods. In addition, the strong recovery experienced in consumption following 2020’s COVID-19-induced recession is now slowing to a stop. As for companies, less favourable financing conditions owing to higher interest rates are impeding investment.
    • Europe and the USA will likely experience stagflation, i.e. almost zero real economic growth combined with high inflation. Relatively robust labour markets, however, should prevent the economy from slipping into an actual recession. Real growth in the USA and the eurozone could then rise again to above 1% in 2024.
    • Global economic growth in 2023 will thus be driven almost exclusively by emerging markets. China will resume its role as the engine of global growth. The consequences of the intense COVID-19 wave and problems in the real estate market, however, continue to hamper economic development there. While growth is expected to recover somewhat compared to 2022 (3.0%), at 4–5% it will remain far from the growth rates seen in the past.
    • Following the Russian invasion of Ukraine in 2022, the energy and commodity markets have become a decisive factor influencing the global economy. Fears that the supply of natural gas in Europe could be restricted and that a severe recession could be imminent have proved to be unfounded, so far at least. However, the effects of last year’s record energy prices will continue to leave their mark on growth and inflation rates in 2023, especially in Europe. Moreover, a reliable supply of natural gas for Europe in the winter of 2023/24 is by no means guaranteed as things stand.
    • In addition to the war in Ukraine, increased tensions between the USA and China as well as within the Middle East pose geopolitical risks that could have a significant impact on the economic outlook.
    • While inflation will remain high in advanced economies, in most cases it is now falling again and this trend is expected to continue in the course of 2023. Nevertheless, it is expected that price increases will in 2024 still remain well above the target set by major central banks.
    • Persistently high inflation and economic stagnation create a credibility dilemma for central banks. Two factors are decisive: firstly, whether the central banks are prepared to raise interest rates further if necessary. And secondly, whether they are successful in combating inflation without triggering a recession. This will prove more challenging for the ECB than the US Fed, mainly because the inflation outlook for the eurozone is clouded by greater uncertainty compared to the US.
    • This outlook is influenced by significant risks including, in particular, a further escalation of the Russian war of aggression against Ukraine with renewed price shocks for energy and commodities, a potential recession as a consequence of central banks raising interest rates too sharply, or a prolonged uncontrolled COVID-19 wave in China.

    Chief Economist Michael Menhart explains:


    Munich Re assumes no guarantees as to the accuracy of this data, which is collected as of specific dates and can also change at any time. The information should not be used as the basis for any decision without prior professional advice and careful contextual analysis. Munich Re is not liable for damages arising from any decisions that third parties may take on the basis of this information.


    Contact our experts
    Michael Menhart
    Michael Menhart
    Head of Economics, Sustainability and Public Affairs
    Oliver Büsse
    Oliver Büsse
    Head of Economic Research


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