Global Economy Seeing Modest Growth with Positive Outlook
GLOBAL REPORT
SUMMARY. Many factors are pointing to modest growth in Q3 2023. This should lead to total production globally growing at +2.4% in 2023 vs 2022 (it was 2.6% in Q2 2023), and the outlook for the next few years remains positive with growth accelerating from 2025. Apart from Russia and Ukraine, the main countries to show a decline are South Korea, Slovakia, Netherlands. However, the segment picture shows some differences.
Several drivers are influencing the global economic picture.
- Fuel prices eased earlier this year, recently they have grown slightly and are no longer showing signs of easing. This remains a serious issue.
- Supply chains remain constrained and show no signs of improving.
- The war in Ukraine shows no sign of a speedy conclusion, despite recent successes by Ukraine.
- Ukrainian exports of wheat, other grains and fertilizer have declined massively following Russia’s ending on the Grain Deal. Alternative routes (overland, and via the Danube) simply don’t have the necessary capacity.
- Inflation is easing, but it continues to be a major concern for central banks as they consider raising their interest rates. This will pose a risk to economic growth in all regions. Inflation and price increases are putting OEMs in a difficult situation.
- Risk of recession continues in the background for several countries, notably China, USA and Germany, and this could drag other countries into recession.
- Covid is still lingering with global deaths now at over 6.9 million, and a new variant has the medical world concerned.
- Latent demand for machinery keeps building, which is a positive sign.
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