Peterson Institute for International Economics: 2023 Insights on Global Economy & Trade

The Peterson Institute for International Economics (PIIE) is a nonpartisan think tank dedicated to promoting open markets and sustainable global economic growth. With its team of renowned economists and policy experts, PIIE provides timely insights and evidence-based analyses on a wide range of international economic issues.

Key 2023 Economic Outlook

According to the PIIE's latest "Global Outlook 2023," the global economy is expected to grow by a modest 2.2% in 2023, down from the estimated 3.4% in 2022. This slowdown is primarily attributed to the persistent effects of the COVID-19 pandemic, ongoing geopolitical tensions, and rising inflation.

Top 5 Global Economic Risks

1. Inflation Control: Central banks around the world are facing the challenge of managing inflation, which hit a 40-year high in 2022. The International Monetary Fund (IMF) projects that inflation will remain elevated in 2023, averaging 6.5%, before gradually declining.

2. Geopolitical Uncertainty: The ongoing war in Ukraine and other geopolitical conflicts continue to disrupt global trade, energy markets, and financial stability. PIIE estimates that the conflict is costing Europe close to $1 trillion per month.

3. Debt Sustainability: The global debt-to-GDP ratio has increased significantly over the past decade, reaching a record high of 355% in 2023. This raises concerns about debt sustainability, especially in developing countries with limited fiscal space.

4. Supply Chain Disruptions: The pandemic has exposed the fragility of global supply chains, leading to delays, shortages, and higher prices. PIIE's research suggests that supply chain disruptions could cost the global economy up to $2.5 trillion in 2023.

   

5. Climate Change: The effects of climate change are becoming increasingly evident, from extreme weather events to rising sea levels. PIIE estimates that climate change could cost the global economy up to $10 trillion per year by 2050.

Implications for Business and Policy

In light of these challenges and risks, businesses and policymakers need to adapt their strategies to navigate the uncertain global economic environment. Key implications include:

• Increase Resilience: Businesses should strengthen their supply chains, diversify markets, and invest in digital transformation to mitigate the impact of disruptions.
• Manage Inflation: Central banks must balance the need to control inflation with supporting economic growth. Governments can also implement targeted measures to assist vulnerable households.
• Promote Sustainable Growth: Governments and businesses need to prioritize policies that foster sustainable economic growth, including investing in renewable energy, education, and infrastructure.
• Strengthen International Cooperation: Global cooperation is essential for addressing shared challenges such as climate change, debt sustainability, and trade disputes.

Ongoing Research and Policy Recommendations

The Peterson Institute continues to conduct cutting-edge research and engage with policymakers on a wide range of global economic issues. Some of their ongoing research projects include:

• Trade Policy and Economic Growth: PIIE is evaluating the impact of trade agreements and trade policies on economic growth and development.
• Financial Stability and Fintech: PIIE is examining the risks and opportunities presented by fintech and the future of financial regulation.
• Energy and Climate Change: PIIE is assessing the economic and environmental implications of the transition to a low-carbon economy.
• Emerging Markets and Development: PIIE is studying the economic challenges and opportunities facing emerging markets and developing countries.

By providing timely insights, rigorous analysis, and policy recommendations, the Peterson Institute for International Economics helps policymakers and business leaders make informed decisions and shape a more prosperous and sustainable global economy.

Additional Tables and Data

• Table 1: Global Economic Growth Forecast

• Table 2: Inflation Rates

• Table 3: Global Debt-to-GDP Ratio

• Table 4: Estimated Costs of Climate Change