Monthly economic brief: April 2023

Economic outlook

The outlook for 2023 has improved in recent months however remains subdued.

• At a global level, some economic headwinds have eased from last year with notable improvements in global supply chains and falls in global commodity price inflation. However their impacts alongside tighter monetary policy across central banks are expected to weaken growth prospects over the next few years.
• The IMF forecast global growth to weaken from 3.4% in 2022 to 2.8% in 2023 and remain subdued at 3% in 2024. Global inflation is forecast to fall from 8.7% to 7% in 2023, reflecting lower commodity prices while wider underlying inflationary pressures remain more persistent. ^[19]
• At a UK level, growth forecasts for the year ahead have been revised up from forecasts made in the second half of 2022 with a UK recession no longer expected. In March, the OBR forecast UK GDP to fall 0.2% over the year however not enter a technical recession, while inflation is forecast to fall to 2.9% by the end of the year. ^[20]
• More broadly, the average of new independent forecasts published by HMT in April indicates UK GDP growth will be flat in 2023 (0%), which is the highest average forecast since September 2022, while inflation is forecast to fall to 4% by the end of the year. ^[21]

• At a Scotland level, latest forecasts in March from the Fraser of Allander Institute forecast output to fall 0.7% in 2023 (revised up from -1% in February), before growing 0.9% in 2024 and 1.7% in 2025. ^[22]
• Overall, economic activity has strengthened at the start of 2023 having remained broadly flat over the second half of 2022, resulting in the outlook for 2023 being revised up from previous estimates. Inflation is forecast to fall sharply this year; however economic growth is expected to remain subdued as households and businesses continue to face challenges from higher prices and higher interest rates.