RWI Konjunkturberichte

The global economy continues to grow at a moderate pace. Regional differences, especially within the group of the advanced economies, have decreased. Up to now, services contributed more to growth than industry. At last, however, there were also signs of a recovery in manufacturing. This is expected to continue in the forecast period. Global trade is recovering gradually in line with industrial production. Last year it was impacted by the weak demand for investment goods, a reduction in inventories and the shift of demand from goods to services during the normalization after the corona pandemic. These factors are losing importance. However, global trade continues to be burdened by increasing restrictions to trade. The decline of inflation slowed with renewed increases in some commodity prices and strong wage growth. Strongly increasing prices for services keep core inflation excluding food and energy prices high. In consequence central banks are likely to decrease their policy rates more gradually than it was expected at the beginning of the year. The global economy is expected to continue to expand moderately in the forecast period. After an expected increase of 2,8% in the current year, it will likely grow by 2,7% in the coming year. The decline in inflation - albeit at a slower pace – and robust labor markets are contributing to this development by strengthening private consumption. Investment is likely to be encouraged by gradually decreasing real interest rates. There continue to be risks for the global economic dynamic resulting from the conflict in the middle east and the war against Ukraine. The same holds true for trade conflicts. In addition, a stubborn inflation could result in a longer period of restrictive monetary policy, which in turn would weigh on investment.

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