Published On: 18 July 2023

Explore the latest economic developments in major economies worldwide, as central banks grapple with sluggish growth and high inflation. While some emerging markets defy these trends, others face challenges. Read on to discover the key highlights from the UK, Ukraine, Europe, the US, Far East, and emerging markets. 

UK Economy:
Despite analysts’ predictions of decline, the UK economy pleasantly surprised with a growth of 0.2% in April 2023. However, other positive news remains scarce, as the Bank of England raised interest rates to 5%, the highest in 15 years. Chancellor Jeremy Hunt emphasised the necessity of hiking rates to combat stubborn inflation, which stood at 8.7% in May. Rising mortgage rates caused concerns, prompting discussions between bank bosses and Mr. Hunt about providing flexibility for struggling mortgage holders. Prime Minister Rishi Sunak urged homeowners and borrowers to remain resilient in the face of rising rates. 

Although annual house prices fell for the first time in 11 years, retail sales held up, indicating stability. The government confirmed the potential discontinuation of its windfall tax on oil and gas firms if energy prices normalise, which could alleviate the ongoing cost of living crisis. Furthermore, the UK signed the Atlantic Declaration with the US, strengthening economic ties and also reached a new pact with the European Union to discuss financial regulation and standards twice a year. 

Notable events in the London Stock Exchange included the cancellation of We Soda’s share sale, Cineworld’s bankruptcy restructuring plan, and Arm Holdings listing its shares in the US. On a positive note, Vodafone and Three agreed to merge their operations, creating the country’s largest mobile phone operator.
Ukraine Recovery Conference:
Global leaders and organisations, such as the World Bank, convened at the Ukraine Recovery Conference to discuss rebuilding the war-torn nation. While acknowledging the need for international assistance, World Bank Managing Director Anna Bjerde expressed optimism about Ukraine’s potential to convert its assets into economic opportunities. The conference also deliberated on fast-tracking Ukraine’s entry into NATO, supported by the British government. Ukrainian President Volodymyr Zelensky addressed the conference, highlighting the country’s potential as a significant source of economic growth in Europe. 

European Economic Landscape:
The European Central Bank (ECB) raised its benchmark interest rate to 3.5% in efforts to combat inflation, which decreased from 6.1% in May to 5.5% year-on-year in June. The eurozone experienced a recession, with a 0.1% contraction in economic output between January and March, attributed to falling household spending. However, despite challenges such as high inflation and the Russian invasion of Ukraine, the euro maintained its status as the second most widely used currency. EU member states are facing increased budget contributions due to recent crises, straining the EU’s capacity to react to future challenges. 

Germany faced economic difficulties, but the German Bundesbank predicts an end to its recession in the second quarter of 2023, fueled by improving supply chains and falling energy prices. Ireland provided positive news, with a 2.7% increase in economic output in Q1 2023. 

US Economic Developments:
The US Congress reached a deal to lift the country’s borrowing limit, averting default on its significant debt. The US Federal Reserve opted not to increase interest rates for the first time in over a year, allowing time to assess the impact of previous rate hikes. However, analysts project future rate increases as inflation fell for the 11th consecutive month, dropping from 4.9% in April to 4% in May. Job creation remained robust, with the addition of 330,000 jobs in May, instilling confidence in avoiding a recession. President Biden’s handling of the economy faced criticism, with a low approval rating. 

Business activity in the US expanded in early June, but manufacturing decline and prior rate hikes posed challenges. Small businesses demonstrated confidence, with an increasing number expecting revenue growth and intending to hire more staff. 

Far East Economic Outlook:
China’s industrial output increased by 3.5% year-on-year in May, signaling a slight easing in demand for Chinese manufactured goods. Retail sales also dipped, falling to 12.7% growth in May from 18.4% in April. Analysts speculate that the post-COVID recovery may be waning, hinting at a potential economic double dip. Nevertheless, Chinese Premier Li Qiang remains optimistic, aiming for 5% economic growth this year. 

US-China tensions persisted, but diplomatic efforts were made during US Secretary of State Antony Blinken’s visit to Beijing. Both sides expressed openness to additional talks and sought to improve relations. Russia’s President Putin faced internal challenges as Yevgeny Prigozhin led an apparent mutiny, highlighting cracks in his authority. While Russia’s economy is predicted to grow by 0.8% in 2023, the country aims to bolster its finances through a windfall tax on big companies. 

Economic Outlook for Emerging Markets:
Foreign ministers from Brazil, Russia, India, China, and South Africa met to call for a rebalancing of the global order away from western countries. Brazil experienced impressive economic growth, surpassing analysts’ expectations with a 0.56% increase in April. President Luiz Inacio Lula da Silva expressed confidence, anticipating at least 2% growth this year. S&P expects India to be the fastest-growing economy in the Asia Pacific region in 2024, with a projected growth rate of approximately 6%. Fitch Ratings also raised its growth forecast for India, highlighting the nation’s high bank credit growth and infrastructure spending. 

India’s Prime Minister Narendra Modi visited the US, strengthening global relationships. Additionally, Foxconn’s announcement of manufacturing iPhones in Karnataka by April 2024 will create around 50,000 jobs. Russia’s President Putin faced challenges amid ongoing Ukraine conflict and global sanctions, impacting the economy. Bloomberg Economics predicts growth of just 0.8% in 2023, while Russia’s central bank forecasts 2% growth.

These global economic trends reflect a mix of challenges and opportunities for major and emerging economies. While some countries experienced sluggish growth and high inflation, others demonstrated resilience and potential for growth. The decisions and policies adopted by central banks, governments, and international partnerships will play a crucial role in shaping the future trajectory of the global economy. 


The value of your investments may go down as well as up and you may not get back the amount you invested.

While considerable care has been taken to ensure the information contained in this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information.

This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based on its content.

Sources: Click here 

Subscribe to our newsletter.

Stay up to to date with the latest news at Murdoch.

We offer free, no-obligation telephone or video calls
with one of our financial experts.

Call us today at 01420 83517

Our service applies for portfolios of £100,000 or more.