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World Economic Situation and Prospects 2023


Recently, the United Nations has released a new report World Economic Situation and Prospects 2023, which stated that the Global Gross Domestic Product (GDP) is likely to drop to 1.9 % in 2023 from 3 % in 2022.


GS III: Indian Economy

Dimensions of the Article:

  1. Report Findings
  2. Indian Prospect
  3. Recommendations

Report Findings:


  • Average inflation rate was 9% worldwide in 2022, causing budget difficulties for developed and developing countries alike.


  • Current economic downturn hinders recovery from Covid-19 crisis, putting several countries at risk of recession in 2023.
  • Job recovery slower in most developing countries in 2022.
  • Women’s employment losses during the pandemic have not fully been reversed.

Global Output

  • World output growth can return to 2.7% in 2024, dependent on changes in conflict and supply chain disruptions.

Country Projections

  • China expected to grow at 4.8% in 2023 and 4.5% in 2024.
  • US estimated to have 0.4% economic growth in 2023 and 1.7% in 2024.
  • Russian exports rose in 2022 due to increased trade with China, India, and Turkey.

South Asia Outlook

  • Economic outlook has greatly worsened due to high food and energy prices, monetary tightening, and fiscal vulnerabilities.
  • Average GDP growth expected to decline from 5.6% in 2022 to 4.8% in 2023.
  • Bangladesh, Pakistan, and Sri Lanka face challenging economic prospects and sought assistance from IMF in 2022.

Indian Prospect:

Growth Rate

  • India’s growth expected to remain strong at 5.8%, lower than the 6.4% estimated for 2022, due to higher interest rates and global slowdown impact on investment and exports.
  • Food and energy subsidies prevented a major downfall in India.
  • India’s growth projected at 6.7% in 2024, fastest growing among major economies.


  • Annual inflation estimated at 7.1% in 2022.
  • Inflation expected to decrease to 5.5% in 2023 as global commodity prices moderate and slower currency depreciation reduces imported inflation.


  • Unemployment rate in 2022 declined to pre-pandemic levels through increased urban and rural employment, indicating strong domestic demand.
  • Youth employment still below pre-pandemic levels, especially among young women.


Calibration of Macroeconomic Policies

  • Balance between stimulating output and controlling inflation needed through calibrated macroeconomic policies.
  • Effective coordination among central banks and clear policy messages necessary for managing and moderating inflationary expectations.

De-anchoring of Inflation Expectations

  • Reform of existing frameworks to benefit, central banks also need a deliberate and comprehensive process to maintain credibility and avoid de-anchoring of inflation expectations.

Reprioritization of Public Expenditures

  • Public expenditures need to be reallocated and reprioritized to support vulnerable groups through direct policy interventions.
  • This requires strengthening social protection systems and providing support through targeted subsidies, cash transfers, and utility bill discounts.

Scale up SDG Financing

  • Urgent need for stronger international commitment to expand emergency financial assistance and scale up SDG financing for:
    • Strengthening social protection systems and providing support through targeted subsidies, cash transfers, and utility bill discounts, complemented by reductions in consumption taxes or custom duties.

Source: Down to Earth

December 2023