After a brief setback in the second quarter of 2022, the world economy is expanding again. Two shocks pushed the economy off course in the second quarter – Russia’s invasion of Ukraine and COVID-19 lockdowns in mainland China.

Recent data suggests that the economy is back on track: the last two years have shown the importance of being flexible, especially in emerging markets.

Global demand is cooling, and producers are adapting to supply-chain disruptions. These factors are expected to moderate global inflation in 2023 and 2024. The global economy is expected to achieve a “soft landing” with real GDP growth averaging a little under 3% over the next two years. Our team also believes there will be a multispeed economy, however, with Western Europe likely to experience a mild recession early next year. Other major economies will avert recessions but perform below potential.