World GDP forecast raised to reflect brighter US outlook

Oxford Economics March Update

• Oxford Economics has raised our 2023 world GDP growth forecast for the second consecutive month to 1.7%, from 1.5% a month ago. They expect global GDP growth to pick up to 2.5% in 2024, but this would still represent a lacklustre performance, even by the standards of the post-global financial crisis period. The global economy still looks set for a sustained period of weakness.

• Recent activity data for advanced economies have generally continued to surprise the upside. They now expect US GDP to grow by a solid 0.5% q/q in Q1, a touch weaker than in Q4. They’ve also pushed back the start point for a decline in GDP to Q3 from Q2 previously and reduced the size of the peak-to-trough fall. This has raised our 2023 growth forecast to 0.9% from 0%

• While eurozone GDP contracted in Q4, They expect the region as a whole to avoid two consecutive quarters of falling GDP. Our 2023 eurozone growth forecast of 0.6% is slightly weaker than our US forecast, but it’s substantially better than some of the more bearish expectations at the end of last year.

• They now expect more monetary policy tightening due to the upward revisions to our near-term growth assessment and wider concerns about the stickiness of inflation. They envisage both the Fed and the ECB will hike rates by a further 75bps this year, representing a 50bps rise to the Fed’s peak policy rate and a 25bps increase to the ECB’s from a month ago.

• Due to the lagged impact of anticipated additional policy tightening, they’ve partially offset the better-than-expected H1 growth performance by nudging down their forecasts for H2 2023 and beyond. This has resulted in a smoother growth profile.

• It is worth noting that although both their baseline forecast and the balance of risks around it have certainly improved over the past few months, 2023 is still set to be a year of steady but weak economic growth. High policy rates look set to constrain any recovery in 2024. The recent shift in their calendar year world GDP growth forecast mainly reflects changes in the timing of growth, rather than a significant upward shift in the expected level of activity.

Source: Oxford Economics

World population just passed 8 billion

Throughout history, each new billion people has arrived faster than the previous billion.

So how did we get here and what has global population growth looked like historically?

As these charts show, it took humans a while to hit our first landmark of 1 billion people in 1803. This was largely facilitated by the many advances made during the second industrial revolution that began in the 1700s.

Since then, rising fertility rates and continuing developments in medicine and agriculture have allowed the global population to increase rapidly. But, due to shifting demographics and declining fertility rates, the rate of growth has been slowing for some time.

These will be the world's most populous countries by 2030

India's population is set to rise to 1.515 billion in 2030 from 1.417 billion in 2022, which is set to make it the world's most populous country in 2030 according to the latest edition of the United Nations' World Population Prospects.

China (1.426 billion) is currently just in front of India (1.417 billion) with the world's largest population, but the two countries remain significantly ahead of the rest – no other nation will surpass 360 million as we move into the next decade.

Source: World Economic Forum