The U.S. International Trade Commission (USITC) highlighted six macroeconomic trends in the world, providing a glimpse into the direction of the global economy.
Macroeconomic trends
These patterns and changes are as follows:
World GDP
A fundamental way to measure economic health is in the performance of Gross Domestic Product (GDP).
After strong growth of 6.3 percent in 2021, global economic growth slowed in 2022 to 3.4 percent.
Inflation control measures, Russia‘s invasion of Ukraine and the resurgence of Covid-19 cases in China contributed to slower growth during the year.
Meanwhile, emerging market and developing economies grew faster (4 percent) than advanced economies (2.7 percent).
The U.S. economy grew 1.9 percent, slower than the world average and the average for advanced economies.
While the economies of India, the United Kingdom (UK) and the European Union grew at rates above the world average, the growth rates of Canada, Mexico, China and Japan were below the world average.
Macroeconomic trends: Inflation
The rate of this indicator measures the generalized increase in the prices of goods and services.
While global inflation rose in 2022, with an average increase in consumer prices of 8.7 percent, the previous year’s growth was 4.7 percent.
Emerging markets and developing economies experienced higher inflation than advanced economies.
In the United States, consumer prices rose 8% in 2022, compared to 4.7% in 2021.
Inflation rates in the UK and EU exceeded 9%, but those in Japan and China were relatively low, while energy and food prices began to fall in the second half of the year, reducing global inflation rates.
Manufacturing production
Compared to 9.4 percent in 2021, global manufacturing output growth slowed in 2022, growing 2.9 percent.
The substantial increase in global manufacturing output during 2021 was mainly due to a recovery in production above 2020 levels during the peak of the Covid-19 pandemic.
Industrialized economies experienced lower output growth in 2022 than industrializing economies.
Electrical equipment, computer products, beverages, other transport equipment, and motor vehicles recorded the largest expansions in growth.
Labor force
Total global hours worked, an indicator of the health of the global labor market, continued to recover from the 2020 lows, but remained 1.4% below pre-pandemic levels.
Working hours in high and upper-middle income economies returned almost to pre-pandemic levels; those in middle and low income economies took longer to recover.
Foreign direct investment
Global FDI inflows declined 12.4% in 2022, driven by declining financial flows to developed economies during the year.
Developing economies experienced 4 percent growth in FDI inflows in 2022, but FDI inflows to developed economies fell 36.7 percent.
Although global FDI inflows declined, the overall value of announced greenfield projects increased 64 percent in 2022 compared to 2021.
The highest value of greenfield projects announced in 2022 corresponded to three key areas: power and gas supply, electronics and electrical equipment, and information and communication industries.
Exchange rates and macroeconomic trends
The value of the U.S. dollar appreciated overall during the year, rising 5.2%, according to the Federal Reserve‘s broad index of world currencies.
While the dollar appreciated against the currencies of all major U.S. trading partners except Mexico, the largest gains were recorded against the Japanese yen (14.3 percent), the British pound (11.5 percent) and the Indian rupee (11.3 percent).
The dollar fell 5.2% against the Mexican peso.