World economic growth slowed to 3.3% in 2022 from 6.5% in 2021, and headwinds will continue to increase in 2023, according to UBS Group AG.

After recovering in 2021 from the Covid-19 pandemic, economic momentum slowed in 2022.

The war between Russia and Ukraine contributed to rising commodity prices, which added to rising inflation, which reached multi-decade highs in most major economies.

This led to the fastest pace of monetary tightening by many major central banks since the 1980s.

Against this backdrop, U.S. GDP growth slowed to 2.1% in 2022 from 5.9% in 2021 as the Federal Reserve raised interest rates.

Meanwhile, reduced energy supplies from Russia and the tightening of the European Central Bank’s monetary policy added to headwinds for the euro zone economy, whose growth slowed to 3.5% in 2022 from 5.3% in 2021.

In addition, weakness in the eurozone contributed to the slowdown in Switzerland.

World economy

UK GDP grew 4.0% in 2022, down from 7.6% in 2021, with momentum undermined by rising inflation, interest rate hikes by the Bank of England (BoE) and weaker global demand.

For its part, China‘s economy grew 3.0% in 2022, down from 8.4% in 2021, reflecting an economic drag from the government’s zero-Covid policy, along with a slowdown in the nation’s real estate sector.

Other major Asian economies recorded a less marked slowdown, with India‘s GDP growth of 7.0% in 2022, down from 8.7% in 2021.

South Korea‘s GDP grew 2.6% in 2022, compared to 4.1% in 2021.

The reopening of the economies generated exceptionally strong demand for goods, which overwhelmed supply and generated inflation.

Just as this pressure faded, the war between Russia and Ukraine caused energy and food prices to rise, further triggering inflation.

High inflation affected many major economies, with a global average of 8.5% in 2022.

However, inflation remained relatively subdued in China (3%) and Japan (1.1%), as neither country experienced an exceptional increase in demand following the pandemic.