Chapter 1: Global Prospects and Policies

Divergent growth prospects across the world’s regions pose a challenge to returning to prepandemic output trends. Despite signs of resilience earlier in 2023, the impact of policy tightening to reduce inflation is expected to cool economic activity going forward. While risks to the outlook are more balanced than earlier in the year, on account of Swiss and US authorities’ having acted decisively to contain financial turbulence, they remain tilted to the downside, implying little margin for policy errors. Monetary policy should stay the course to bring inflation to target, while fiscal consolidation is needed to tackle soaring debts. Structural reforms are crucial to revive medium-term growth prospects amid constrained policy space. Accelerating the green transition, increasing resilience to climate shocks, and improving food security for millions of people require strengthened multilateral frameworks and adherence to rules-based platforms for international cooperation.