Quarter 2, 2023 Macro Review | Annual economic review: unpacking the slower GDP growth, inflation stability, and changing the FX stream dynamics
23 October 2023

Global economic growth is anticipated to decrease from 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. In comparison to the April 2023 World Economic Outlook (WEO) projections, there has been a modest 0.2 percentage point improvement in the growth forecast for 2023, while the 2024 projection remains unchanged. It's important to note that this forecast for 2023-24 falls considerably short of the historical annual average of 3.8 percent observed between 2000 and 2019. Furthermore, it lags the historical averages for various income groups when considering both overall GDP and per capita GDP. The decrease in growth from 2022 to 2023 is primarily driven by advanced economies, which are experiencing weaker manufacturing activity and certain unique factors, even though there is stronger performance in the services sector. In contrast, emerging markets and developing economies are expected to maintain relatively stable growth in 2023 and 2024, though there are noticeable variations among regions. On a year-over-year basis, global growth hit its lowest point in the fourth quarter of 2022. However, in some major economies, this decline is not expected to bottom out until the second half of 2023 (IMF, July 2023).

If we take a close look at the south Caucasus region, Georgia’s neighbors are expected to show moderate to weak growth for 2023: Armenia (+5.5 percent y/y), Azerbaijan (+3 percent y/y), Türkiye (+3.0 percent y/y), and the Russian economy is also expected to show positive 1.5 percent y/y (adjusted from 0.7) growth. The output in emerging markets and developing economies (EMDEs) is expected to grow by 4.0 percent in 2023, and by 4.1 percent in 2024.