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Global Economic Outlook (GEO)

Global Economic Outlook (GEO)

Markets Outlook

This document is a regular publication prepared by Monetary`s section analytical team of Czech National Bank and aims to pool information about the latest predictions and outlooks of international institutions, selected central banks and Consensus Economics for the main economic areas of the world – the euro area, Germany, the USA, the United Kingdom, Japan, China and Russia. The global economic outlook is complemented with an analysis of a selected topical issue from the world economy.


The Year 2023

GEO Publication October 2023: The global economy will see slightly slower economic growth next year against a background of higher inflation, as shown by the new IMF and OECD outlooks. Additional details are published in the October GEO, with the chart in the current issue illustrating the recovery in air transport in terms of the number of commercial flights. Although the number of commercial flights worldwide has exceeded the 2019 figure, this is still not the case within the EU. The thematic analysis focuses on the sharp and temporary increase in government spending to fight the COVID-19 pandemic from the perspective of subsequent inflation and bond revaluation.

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GEO Publication January 2023: The short-term economic outlook for the euro area has improved. The euro area economy is being dampened by high inflation and tighter financing conditions, which are slowing both consumption and production. However, retail sales and industrial production returned to month-on-month growth in November. Unemployment has stayed at its lowest level in the history of the euro area (6.5%) since October and sentiment indicators were signalling a visible improvement in the sentiment of consumers, industrial producers and service providers in late 2022 (although they remain below long-term averages).

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The Year 2022

GEO Publication August 2022: According to Eurostat’s flash estimate, quarterly GDP growth in the euro area rose more than expected (+0.7%) in Q2. In annual terms, the euro area economy grew by 4%. The growth was driven mainly by the lifting of Covid restrictions, which positively affected tourism. This was particularly apparent in France and southern euro area countries, where growth exceeded expectations. 

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The Year 2021

GEO Publication April 2021: The euro area economy contracted by 0.7% under the strain of the second wave of the pandemic at the end of 2020, and activity is expected to decline further in 2021 Q1. The euro area shrank by 6.6% in 2020 as a whole and will be affected mainly by the coronavirus pandemic again in 2021. Leading indicators remain favourable despite a decline in industrial production in February. The unconvincing situation in industry at the start of this year was due to supply chain issues, especially shortages of semiconductor components for the automotive industry. However, the manufacturing PMI firmed to a record high in March (due mainly to Germany) and, together with an improvement in the services PMI, caused the composite indicator to move into the expansion band. At its March meeting, the European Central Bank announced it would significantly increase the pace of asset purchases in Q2 compared to the initial months of this year. The US economic growth outlooks are responding positively not only to the White House’s plans, but also to the improving coronavirus situation. The new IMF outlook expects GDP to grow by 6.4% this year.

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GEO Publication Jan 2021: The euro area economy was in the grip of a second wave of the pandemic at the end of 2020. Many countries have yet to get the pandemic under control, so it will continue to weigh on the euro area in 2021. The euro area entered 2021 with a relatively robust industrial sector, which will mitigate the slump in services. The current volatility in economic activity will thus be substantially smaller than in the first wave of the pandemic. The current worsening of the situation was reflected by a downward revision in expected recovery of euro area growth in 2021 (4.4%). In 2022, the euro area will grow at a pace of 4% according to the January CF. According to the January CF outlook, the US economy will record growth of 4.4% this year, 0.4 pp higher than the December estimate. CF also improved its GDP growth outlook for 2020 by 0.1 pp to -3.5%. The threat of a hard Brexit was averted at the last minute by a trade deal agreed between the EU and the UK on Christmas Eve, but the UK economy is grappling with a surge in coronavirus cases.


The Year 2020

GEO Publication Oct 2020: COVID-19-related government restrictions caused the largest-ever decline in the euro area economy. GDP fell by 14.7% in 2020 Q2 compared with the same period of last year. Household consumption decreased by almost 16%, while investment, imports and exports all dropped by more than 20%. Government expenditure went down by 2.5%, but some countries (Germany and Spain) recorded year-on-year growth due to record-high government stimulus. From the sectoral
perspective, activity fell not only in services (especially trade, restaurants and professional services), but also in industry. The ECB left its monetary policy stance unchanged at its September meeting. Euro area monetary policy thus remains very accommodative. The ECB said only that it would probably use the entire PEPP envelope by June 2021. The appreciation of the euro against the dollar and other currencies was discussed, including with regard to current inflation. 

GEO Publication May 2020: COVID-19: hope? The main news item again in May is naturally coronavirus, which, according to the WHO, the African continent will not avoid in the near future. This raises concerns of a death toll several times higher than in advanced countries. Signs of the pandemic receding, especially in Europe, and the related restart of the European economies, offer some hope for the world economy. Assuming that a second wave of the pandemic does not arrive, most economies will visibly return to growth in 2021. The good news is that the estimates have shifted upwards compared with April.

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GEO Publication March 2020: COVID-19! The main news item in March, and probably the whole year, is and will be the coronavirus pandemic, of which Europe became the epicentre in March. In modern history, its impact on the global economy can only be compared with the effects of the financial crisis following the fall of Lehman Brothers. Individual nations are adopting unprecedented measures, and this is being reflected in their economic indicators. Demand shocks arising from restrictions imposed under states of emergency are combining with supply shocks manifesting in decreased output. Whether a classic recession (falling output and prices) or stagflation (falling output and rising prices) will prevail will depend on many factors, including the response of the authorities and the financial markets. Central banks are trying to react promptly. 

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GEO Publication January 2020: January 2020 has entered modern history as the month when the UK, as the EU’s third strongest economy, left this bloc after more than 47 years. The GDP growth outlooks show that the growth of the euro area economy will reach just 1% this year. The dollar will weaken slightly against the euro, sterling and the yen at the one-year horizon, but will strengthen moderately against the renminbi and the rouble.

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