The global economy experienced a difficult year in 2022 with the Russia-Ukraine war and China's zero Covid policy sparking new chaos in global supply chains.
The streak saw the world see food and energy prices skyrocket, driving inflation in most economies to four-decade highs.
Nevertheless, this suffering is expected to continue in 2023 which will be plagued with more challenges to come.
Russian-Ukrainian war
The impact of the Russian and Ukrainian wars has mostly been felt today, but with ongoing tensions, the impact will extend into 2023.
This ongoing conflict also means that the energy crisis in Europe is also prolonged.
Inflation and interest rates
Global inflation is projected to ease in 2023 but still remain high, with the International Monetary Fund (IMF) forecasting global inflation to reach 6.5% in 2023, down from 8.8% in 2022.
Energy and raw material costs are forecast to remain high as they will take time to moderate. As a result, global central banks are expected to keep interest rates high for a longer period to lower inflation.
Slow growth and recession
Although inflation is forecast to ease in 2023, economic growth is expected to slow significantly with the IMF projecting the global economy to grow 2.7% in 2023, down from 3.2% in 2022.
At the same time, many economists are more pessimistic that a global recession may occur in 2023.
The reopening of China
The reopening of the great wall of China has boosted the outlook for global growth in 2023.
However, there is also a risk that the recovery will be delayed by the sudden surge in cases in the country and it is feared that it will lead to unbalanced growth.
Bankruptcy
High interest rates, soaring energy costs, more expensive raw materials and low consumer spending will weigh on indebted businesses.
Allianz Trade estimates that bankruptcies worldwide will increase by more than 10% in 2022 and 19% in 2023, surpassing pre-pandemic levels.
Even so, the following five issues are not the only ones that will affect the global economy in the coming year, because they can also be affected by other factors according to changes from time to time.
