Strategy Journal

The Five Global Trends Reshaping the Global Economy in 2023

1. Policy Adjustment on Inflation: The focus is shifting from reducing inflation to maintaining it under control. Both the U.S. Federal Reserve and the European Central Bank emphasize that it’s too early to declare victory over inflation.

2. Unstable Supply Conditions: The traditional ways of understanding inflation through demand and sustainable growth rates are no longer applicable. The pandemic, energy crises, and geopolitical events like Russia’s invasion of Ukraine have made supply conditions highly unstable.

3. Public Finance Concerns: In the U.S., there is a lack of political will to show restraint over budget deficits, which has implications for monetary policy. European nations are also likely to face similar challenges related to defense, demographics, and climate change.

4. Rise of India: As China’s growth rate slows, India is expected to become a more significant contributor to global growth.

5. Slower Global Growth: Productivity growth is slowing, and countries are prioritizing resilience over efficiency, leading to barriers in trade.

Source: FT