Global Economics Intelligence executive summary, October 2023

According to the International Monetary Fund’s (IMF) October World Economic Outlook, global growth is forecast to slow from 3.5% in 2022 to 3.0% in 2023 and 2.9% in 2024 (Exhibit 1). This is similar to April’s report, which forecasted global growth of 2.8% in 2023 and 3.0% in 2024. Furthermore, the October report states that, although the likelihood of a hard landing has decreased over the past six months, China’s property sector crisis could deepen. Near-term inflation expectations have increased and, in turn, could contribute to the persistence of core inflation pressures. Furthermore, more than half of low-income developing countries are in or at high risk of debt distress. The Conference Board shows that US real GDP increased by 4.9% in the third quarter. In the eurozone, third-quarter economic growth was weaker than expected, with GDP falling by 0.1% quarter-over-quarter (for a 0.1% year-over-year rise). In the emerging economies, China’s GDP growth in the third quarter slowed to 4.9% year-over-year (compared with 6.3% in the second quarter), reflecting the fading influence of the base effect. During this time, GDP expanded by 5.2%.

The global economic outlook is generally stable, but uncertainty persists because inflation and high interest rates are eroding purchasing power.

There are mixed signals from global trade. Exports rose for Russia and the United States but fell for Brazil, China, and the eurozone; imports increased for Brazil, Russia, and the United States but fell for China. In China, cross-border trade continued to decline in the third quarter, with a year-over-year drop of –10.2% (–6.0% in the second quarter), exports dropped by –10.8% in the third quarter (compared with a –5.4% decline in the second quarter). Imports decreased by –9.4% (–7.0% in the second quarter). In addition, the Container Throughput Index increased to 129.6 points in August, compared with the previous month (128.0 points revised). European throughput fell, while Chinese ports continued to strengthen.

Overall consumer confidence declined, primarily due to elevated interest rates. Notably, households in Brazil are the exception because they remain more inclined to spend than save. On this point, consumer confidence in Brazil increased to 97.0, the highest reading since February 2014. By contrast, confidence deteriorated in the eurozone, dropping 17.8 after recovering from last year’s historic low. The United Kingdom also saw steep decline. There, the cost-of-living crisis, a slowing jobs market, and the uncertainties posed by the conflict in the Middle East are contributing to a growing unease in consumer sentiment. The view is a bit more nuanced in India. The sales growth for September was 9% year-over-year, which suggests that consumer sentiment remains optimistic, despite economic uncertainties.

Would you like to learn more about the McKinsey Global Institute?

The manufacturing sector has been in contraction for 13 consecutive months. In the eurozone, purchasing managers’ index (PMI) numbers for manufacturing remain in contraction primarily because of declining demand. Meanwhile, Brazil’s PMI for manufacturing decreased from 50.1 in August to 49.0 in September. Despite the decrease, the manufacturing PMI is higher than the year’s average of 47.6. Brazilian manufacturers experienced a setback in September as production levels and new order intakes returned to contraction, following slight growth in the previous month. In line with overall trends, the PMI for manufacturing in India has been in contraction for 13 months in a row, standing at 57.5 in September (down from 58.6 in August). In terms of outliers, the PMI for manufacturing in the United States increased to 50 (47.9 in August). And the picture in the United Kingdom has improved somewhat, with the seasonally adjusted Manufacturing PMI index posting 44.3 in September, up slightly from August’s 39-month low of 43.0.

Similarly, momentum in services is weakening, with most countries experiencing either stagnation or contraction (only India and Russia are exceptions). In the United States, the services PMI decreased to 50.1 (50.5 in August). In the United Kingdom, the Services PMI index posted 49.3 in September, down from 49.5 in August and below the neutral 50.0 threshold for the second month running. And in Brazil, the services PMI decreased to 48.7 in September from 50.6 in August, falling below the 50.0 mark for the first time since February. By contrast, the PMI for services in India expanded to 61.0 in September, among the highest over the past 13 years.

The story for inflation is a bit more subtle. Headline inflation continues to decelerate, although there are countries where it increased, notably the United States, primarily due to increased oil prices. Inflation expectations among most countries, however, remain stable and well anchored at around 2 to 3%.

Core inflation, which excludes the most volatile prices such as food and energy, continued its downward trend around the globe and is approaching more comfortable levels. On this point, core inflation in the United States decreased to 4.1% (annualized) in September (4.3% in August). According to the September Survey of Consumer Expectations, median inflation expectations increased slightly to 3.7 and 3.0% at the one- and three-year horizons, respectively, but decreased marginally to 2.8% at the five-year horizon. The eurozone’s inflation was down to 4.3% in September (5.2% in August), the main driver being food-price inflation (8.8% in September). Excluding energy and food, inflation was 4.5%. The latest reading for producer-price inflation was –8.7% in August (–6.0% in July). UK consumer price index (CPI) inflation remained at 6.7% in September, while core inflation (excluding the price of energy, food, alcohol, and tobacco) dropped to 6.1% from 6.2%. And in China, the consumer prices inflation rate reported 0% in September (inflated at a rate of 0.1% in August), while the core CPI stabilized at 0.8% for three months in a row. Producer prices deflated at a rate of –2.5% in September (−3.0% in August).

The Central Bank of Brazil reduced the Selic rate from 13.25 to 12.75%, which committee members believe is appropriate to keep the necessary contractionary policy and unanimously anticipate reductions of similar magnitude in future meetings (Exhibit 2). In the United Kingdom, the Bank of England (BoE) expects inflation to decrease to around 5% by the end of the year, owing to lower price inflation for energy, food, and core goods (versus 4% as previously predicted). In light of the unexpected fall in inflation in August (down to 6.7% from 6.8% in July), the BoE maintained the policy rate at 5.25%. Finally, new forecasts from the Central Bank of the Russian Federation and Oxford Economics see the country’s economy growing by 0.5–1.5%, with demand potentially curbed by recent monetary policy tightening.

Brazil is the only country continuing to cut interest rates, while central banks in other countries are tightening monetary policy further.

Equity markets turned in a mixed performance in September, followed by declines across the board in October. For US equities in September, the returns of the S&P 500 and the Dow Jones were down to 11.9% (14.0% in August) and 1.1% (4.8% in August), respectively. Meanwhile, the CBOE Volatility Index averaged 17.5 (13.1 in August), signaling a more uncertain market, with the ten-year government bond yielding 4.9%, the highest in the past ten years. In the eurozone, equities waned. In fact, the Eurostoxx 600 index was 5% below its highest value in 2023.

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. View the full report for October 2023 here. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on The reports are available free to email subscribers and through the McKinsey Insights app. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute.

Explore a career with us