Kearney – Global Economic Outlook, 2023-2027

The global economy is expected to see improved growth in 2023 compared to earlier projections, but growth will remain weak through 2027. The average growth output is forecasted to be only 2.6 percent over the 2023-2027 period, down from the previous projection of 2.7 percent. Factors contributing to this expected slowdown include China's declining growth, sovereign debt distress, and contracting manufacturing. In terms of inflation, weaker commodity prices, slowing growth, and easing supply chain pressures are expected to lower inflation rates in most economies. Although inflation forecasts for advanced and emerging economies are higher than anticipated in the first half of 2023, inflation rates are projected to fall to target levels by the end of 2024 or early 2025. Unemployment is predicted to decrease during the 2023-2027 period, with an average of 6.5 percent and leveling out after a peak in 2024. However, shrinking working-age populations in key markets like China, South Korea, and Italy pose a potential risk to the outlook. This risk could be mitigated by Africa's growing labor force and advancements in technology and automation. The United States remains the world's largest economy, followed by China and Japan. China is closing the GDP gap with the United States but is not expected to surpass it by the end of 2027. India, previously the sixth-largest economy, is forecasted to become the fourth largest, overtaking Germany and the United Kingdom. There is an expectation of increased globalization in the next three years, with 66 percent of investors anticipating this. However, concerns about rising protectionism are also present. Digital trade and services, particularly in telecom and IT, could drive globalization, but regionalization and policies promoting domestic self-sufficiency are expected to intensify as well. The Asia and Australasia region continues to be the main driver of global economic output, with projected average growth of 4.1 percent. India's growth remains strong at 7.0 percent, while China maintains a steady output rate of 4.7 percent. Key factors that will shape the economic outlook through 2027 include geopolitical turbulence, climate change, inflation trajectory, labor market imbalances due to an aging population, and technology innovation and accessibility. These factors will have a significant impact on the direction of the global economy in the next five years.