The coming year promises to be a bruising one for the global economy.
A slowdown is certain and the only question is how deep and widespread the slump will be. Downward pressures are severe: the ongoing war in Ukraine, the impact of the COVID-19 pandemic on China — as well as the possibility of another global wave of infections — and continuing efforts by central banks to squeeze inflation out of their economies. Japanese policymakers must prepare for these diverse challenges, ones that will be compounded by a change of leadership at the Bank of Japan and the prospect of instability in the Cabinet.
Kristalina Georgieva, managing director of the International Monetary Fund, has warned that 2023 will be a “tougher” year than 2022, with “one-third of the world economy to be in recession” as the United States, China and the European Union all slow simultaneously. Last October, the IMF projected global growth of 3.2% in 2022 and 2.7% in 2023; in April, the estimate was 3.6% for both years.