Global economy should find bottom in 2023
The global economy suffered in 2022 from war, inflation and an unexpectedly strict covid policy in China. Growth in the Eurozone therefore slowed significantly, particularly in the second half. The outlook for 2023 is subject to high uncertainty, though there are reasons for cautious optimism. China ended its zero-covid policy at the end of 2022, which should gradually brighten Asia's growth prospects. In addition, the energy crisis in Europe has eased for the time being, which has also improved the short-term growth prospects for the Eurozone. However, one major factor of uncertainty for the economy remains, the question of how the sustained higher level of interest rates will affect growth.
Following a phase of cooling, the Eurozone economy should initially stabilize in the first half of 2023. In the second half, we expect a gradual acceleration in growth. Assuming a gradual decline in inflation, the outlook for consumption and investment should begin to brighten. However, in view of the rapid rise in interest rates, the real estate sector represents a risk factor for the 2023 outlook, due to its dependence on favorable financing conditions.
In 2022, the Eurozone recorded a record inflation rate of 8.4%. Due to base effects, especially in food and energy prices, we expect inflation to fall in the course of 2023. On average, we forecast an inflation rate of 5.6% for 2023, and inflation should fall even more sharply to 2.3% in 2024. From today's perspective, the biggest uncertainty factor for this forecast is the development of core inflation. If it remains at a high level for longer, this could have a negative impact on the economy.
Despite this surprising flare-up in the US economy in 4Q22, our outlook for 2023 remains cautious. The negative factors for the US economy will predominantly persist and continue to have an impact. A cooling of the labor market is very likely. This should weigh more heavily than the decline in inflation that we expect. We therefore anticipate a weaker growth rate in consumption, while there should be no improvement in investment spending.