US growth in 2023 will be slower than in 2022 due to tightening monetary and fiscal policy. A recession may be avoided, if energy prices fall, employment growth remains strong, and there is an easing of supply chain difficulties. Still, a recession remains a possibility.

As real wages have fallen, consumer spending in real terms has fallen. And although energy prices have fallen from their peaks, natural gas prices remain historically high, fueling inflation and reducing the purchasing power of consumers and businesses. It is likely that electricity prices will remain relatively high for a long time.

With the relaxation of pandemic-related restrictions, a massive surge in infections has suppressed mobility and production, with suppressed economic activity likely to last for a while. Once the disruption recedes, pent-up consumer demand is likely to boost spending. However, China also faces other headwinds that will restrain growth in 2023, including a troubled property market, a withdrawal of capital from China by global businesses, and restrictions on cross-border trade and investment.

Japan’s economy is accelerating from a low base as pandemic-related restrictions disappear and pent-up demand is unleashed. Growth, however, is likely to be modest as Japan’s economy faces headwinds from the weakened global economy, accelerating inflation and higher energy prices. The yen received a boost as the Bank of Japan partially reversed its monetary policy.

In 2023, India will become the most heavily populated country in the world, surpassing China for the first time in history. India imports relatively cheap oil from Russia, limiting the impact of the energy shock on its economy, and trade as a share of GDP is lower than in most countries, shielding India from the negative consequences of a global slowdown. The rate of inflation, although relatively high, has fallen recently.

This is a high-level summary of the full Economic Outlook as prepared by Dr. Ira Kalish, Chief Global Economist. Download the full Global Powers of Retailing 2023 report to read the full Economic Outlook for 2023. The report also provides an overview of the performance of top 250 retailers, the 50 fastest growers, and provides an analysis of performance across product sectors. It also investigates sustainability in the retail sector, and looks at how retailers are creating the future of the store.