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    Global Economic Prospects, January 2023
    Global Economic Prospects, January 2023
    Global Economic Prospects, January 2023
    Ebook495 pages5 hours

    Global Economic Prospects, January 2023

    By World Bank Group

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    Global growth is projected to decelerate sharply, reflecting synchronous policy tightening aimed at containing very highinflation, worsening financial conditions, and continued disruptions from Russia's invasion of Ukraine. Investment growth in emerging market and developing economies (EMDEs) is expected to remain below its average rate of the past two decades. Further adverse shocks could push the global economy into recession. Small states are especially vulnerable to such shocks because of the reliance on external trade and financing, limited economic diversification, elevated debt, and susceptibility to natural disasters. Against this backdrop, it is critical that EMDE policy makers ensure that any fiscal support is focused on vulnerable groups, that inflation expectations remain well anchored, and that financial systems continue to be resilient. Urgent global and national efforts are also needed to mitigate the risks of global recession and debt distress in EMDEs, and to support a major increase in EMDE investment.Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects,with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.
    LanguageEnglish
    PublisherWorld Bank Publications
    Release dateFeb 23, 2023
    ISBN9781464819506
    Global Economic Prospects, January 2023

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      Global Economic Prospects, January 2023 - World Bank Group

      CHAPTER 1

      GLOBAL OUTLOOK

      Global growth is expected to decelerate sharply to 1.7 percent in 2023—the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis. This is 1.3 percentage points below previous forecasts, reflecting synchronous policy tightening aimed at containing very high inflation, worsening financial conditions, and continued disruptions from the Russian Federation’s invasion of Ukraine. The United States, the euro area, and China are all undergoing a period of pronounced weakness, and the resulting spillovers are exacerbating other headwinds faced by emerging market and developing economies (EMDEs). The combination of slow growth, tightening financial conditions, and heavy indebtedness is likely to weaken investment and trigger corporate defaults. Further negative shocks—such as higher inflation, even tighter policy, financial stress, deeper weakness in major economies, or rising geopolitical tensions—could push the global economy into recession. In the near term, urgent global efforts are needed to mitigate the risks of global recession and debt distress in EMDEs. Given limited policy space, it is critical that national policy makers ensure that any fiscal support is focused on vulnerable groups, that inflation expectations remain well anchored, and that financial systems continue to be resilient. Policies are also needed to support a major increase in EMDE investment, which can help reverse the slowdown in long-term growth exacerbated by the overlapping shocks of the pandemic, the invasion of Ukraine, and the rapid tightening of global monetary policy. This will require new financing from the international community and from the repurposing of existing spending, such as inefficient agricultural and fuel subsidies.

      Summary

      Global growth has slowed to the extent that the global economy is perilously close to falling into recession—defined as a contraction in annual global per capita income—only three years after emerging from the pandemic-induced recession of 2020. Very high inflation has triggered unexpectedly rapid and synchronous monetary policy tightening around the world to contain it, including across major advanced economies (figure 1.1.A). Although this tightening has been necessary for price stability, it has contributed to a significant worsening of global financial conditions, which is exerting a substantial drag on activity. This drag is set to deepen given the lags between changes in monetary policy and its economic impacts, and the fact that real rates are expected to continue to increase.

      FIGURE 1.1 Global prospects

      High global inflation has prompted rapid, synchronous monetary tightening. This has contributed to worsening financial conditions, particularly for less creditworthy emerging market and developing economies (EMDEs). Global growth in 2023 is expected to be the third weakest in nearly three decades, overshadowed only by global recessions. Most country forecasts have been downgraded. The recovery from the pandemic recession is far from complete, especially in EMDEs, and the per-capita income outlook is particularly subdued for poverty-stricken countries.

      Sources: BIS (database); Bloomberg; Haver Analytics; Moody’s; JP Morgan; World Bank.

      Note: EMBI = Emerging Markets Bond Index; EMDEs = emerging market and developing economies. Unless otherwise indicated, aggregate growth rates are calculated using real U.S. dollar GDP weights at average 2010-19 prices and market exchange rates. Shaded areas indicate forecasts.

      A. Short-term policy rate weighted by nominal GDP in current U.S. dollars. t is the month before the U.S. policy rate increases. Cycle ends when the G7-weighted policy rate peaks. Judgement used to define double-peak cycles. March 2022 cycle extended using market-implied interest rate expectations from January 2023 onward, observed on December 16, 2022.

      B. Change in EMBI spreads since January 2022, using Moody’s sovereign foreign currency ratings. Sample includes 11 EMDE energy exporters and 35 EMDE energy importers. Strong credit defined as ratings from Aaa to Baa3. Weak credit defined as ratings from Caa to Ca. Sample excludes Belarus, the Russian Federation, and Ukraine. Last observation is December 13, 2022.

      C. Sample includes up to 37 advanced economies and 144 EMDEs.

      D. Figure shows share of countries with forecast downgrades since the June 2022 Global Economic Prospects.

      E. Figure shows deviation between current forecasts and January 2020 Global Economic Prospects. January 2020 baseline extended into 2023 and 2024 using projected growth for 2022.

      F. Low poverty headcount are EMDEs with poverty headcount in the 25th percentile, and high poverty headcount are those in the 75th percentile. Bars show average per capita GDP growth over 2023-24 for 39 EMDEs. Whiskers show minimum-maximum range. Sample excludes Belarus and the Russian Federation. Poverty data are the poverty headcount ratio at $2.15 a day (2017 PPP).

      Asset prices have been in broad, synchronous decline, investment growth has weakened substantially, and housing markets in many countries are worsening rapidly. Shockwaves continue to emanate from the Russian Federation’s invasion of Ukraine, especially in energy and other commodity markets. Against this backdrop, confidence has fallen precipitously. The world’s three major engines of growth—the United States, the euro area, and China—are undergoing a period of pronounced weakness, with adverse spillovers for emerging market and developing economies (EMDEs), many of which are already struggling with weakening domestic conditions.

      Global inflation has been pushed higher by demand pressures, including those from the lagged effects of earlier policy support, and supply shocks, including disruptions to both global supply chains and the availability of key commodities. In some countries, inflation has also been spurred by large currency depreciations relative to the U.S. dollar, as well as tight labor market conditions.

      Inflation remains high worldwide and well above central bank targets in almost all inflation-targeting economies. Although inflation is likely to gradually moderate over the course of the year, there are signs that underlying inflation pressures could be becoming more persistent. In response, central banks around the world have been tightening policy faster than previously expected. Monetary policy tightening in advanced economies, a strong U.S. dollar, geopolitical tensions, and high inflation have dampened risk appetite and led to widespread capital outflows and slowing bond issuance across EMDEs. Financial conditions have particularly worsened for less creditworthy EMDEs, especially if they are also energy importers (figure 1.1.B).

      Fiscal space has narrowed considerably, and concerns over debt sustainability in many countries have risen as global financial conditions have made it more difficult to service debt loads that have accumulated rapidly in recent years, particularly during the pandemic. Nonetheless, many governments have announced new support measures to shield households and firms from the effects of sharply rising prices, slowing the pace of fiscal consolidation as pandemic-related stimulus is withdrawn.

      Most commodity prices have eased, to varying degrees, largely due to the slowdown in global growth and concerns about the possibility of a global recession. By historical standards, however, they remain elevated, prolonging challenges associated with energy and food insecurity. Crude oil prices have steadily declined from their mid-2022 peak; meanwhile, natural gas prices in Europe soared to an all-time high in August but have since fallen back toward pre-invasion levels. Non-energy prices, particularly metal prices, have declined alongside weak demand. While food prices have eased from earlier peaks, food price inflation remains very high in some EMDEs.

      Against this backdrop, global growth is forecast to slow to 1.7 percent in 2023 (figure 1.1.C). This pace of growth would be the third weakest in nearly three decades, overshadowed only by the global recessions caused by the pandemic in 2020 and the global financial crisis in 2009. This forecast is 1.3 percentage points lower than in June, largely reflecting more aggressive monetary policy tightening, deteriorating financial conditions, and declining confidence. Growth projections have been downgraded for almost all advanced economies and about two-thirds of EMDEs in 2023, and for about half of all countries in 2024 (figure 1.1.D). Global trade is also expected to slow sharply alongside global growth, despite support from a continued recovery in services trade. Downgrades to growth projections mean that global activity is now expected to fall even further below its pre-pandemic trend over the forecast horizon, with EMDEs accounting for most of the shortfall from trend (figure 1.1.E). This suggests that the negative shocks of the past three years—namely the pandemic, the invasion of Ukraine, and the rapid increase in inflation and associated tightening of monetary policy worldwide—are having a lasting impact on economic prospects.

      In advanced economies, conditions have deteriorated sharply, owing to declining confidence alongside high inflation and rapid monetary policy tightening. In the United States, one of the most aggressive monetary policy tightening cycles in recent history is expected to slow growth sharply. The euro area is also contending with severe energy supply disruptions and price hikes associated with the Russian Federation’s invasion of Ukraine. In all, growth in advanced economies is forecast to slow from 2.5 percent in 2022 to 0.5 percent in 2023.

      In EMDEs, growth prospects have worsened materially, with the forecast for 2023 downgraded 0.8 percentage point to a subdued 3.4 percent. The downward revision results in large part from weaker external demand and tighter financing conditions. EMDE growth is anticipated to remain essentially unchanged in 2023 relative to last year, as a pickup in China offsets a decline in other EMDEs. Excluding China, EMDE growth is forecast to decelerate from 3.8 percent in 2022 to 2.7 percent in 2023 as significantly weaker external demand is compounded by high inflation, tighter financial conditions, and other domestic headwinds. The deviation between EMDE investment and its pre-pandemic trend is expected to remain substantial. EMDE investment growth is envisaged to remain below its 2000-21 average pace, dampened significantly by weakening activity, heightened uncertainty, and rising borrowing costs. Low-income countries (LICs) are expected to grow 5.1 percent in 2023, with forecasts downgraded in about 65 percent of countries. Cost-of-living increases and a deterioration in the external environment are weighing heavily on activity in many LICs and compounding weakness in LICs with fragile and conflict affected situations (FCS).

      As a result of the sharp slowdown in global growth, per capita income is not expected to surpass 2019 levels until at least 2024 in about one-third of EMDEs. Per capita income growth is expected to be slowest where poverty is highest (figure 1.1.F). In Sub-Saharan Africa—which accounts for about 60 percent of the world’s poor—growth in per capita income over 2023-24 is forecast to average only 1.2 percent, far less than the pace that would be needed over the remainder of the decade to reach a 3 percent poverty rate by 2030.

      Soaring inflation reflects a combination of supply and demand factors, including large price increases for food and energy products priced in U.S. dollars. Inflation has risen particularly rapidly in poorer countries, partially due to the greater share of food in consumer spending. Relative to previous projections, global inflation is assumed to remain higher for longer. After peaking at 7.6 percent in 2022, global headline CPI inflation is expected to remain elevated at 5.2 percent in 2023 before easing to 3.2 percent in 2024, above its 2015-19 average of 2.3 percent.

      Risks to the growth outlook are tilted to the downside. In light of high inflation and repeated negative supply shocks, there is substantial uncertainty about the impact of central bank policy in terms of both magnitude and timing. As a result, the risk of policy missteps is elevated. Global inflation may be pushed higher by renewed supply disruptions, including to key commodities, and elevated core inflation may persist. To bring inflation under control, central banks may need to hike policy rates more than is currently expected. Financial stress among sovereigns, banks, and nonbank financial institutions may result from the combination of additional monetary tightening, softer growth, and falling confidence in an environment of elevated debt. Given already-weak global growth, a combination of sharper monetary policy tightening and financial stress could result in a more pronounced slowdown or even a global recession this year (figures 1.2.A and 1.2.B). Weaker-than-expected activity in China amid pandemic-related disruptions and stress in the real estate sector, rising geopolitical tensions and trade fragmentation, and climate change could also result in markedly slower growth.

      FIGURE 1.2 Global risks and policy challenges

      Risks are tilted to the downside. Central banks may need to tighten more than expected to bring inflation under control. Given already-weak global growth, this could result in a sharper slowdown or even a global recession this year. A rising number of people are affected by food insecurity, especially in low-income countries. Fiscal challenges in emerging market and developing economies (EMDEs) have become more acute, as exemplified by a precipitous drop in bond issuance. The long-term effects of the adverse shocks of the past three years have led to substantial losses, particularly for EMDE investment and output, which could grow larger if downside scenarios materialize.

      Sources: Bloomberg; Consensus Economics; Dealogic; FSIN and GNAFC (2022); GNAFC (2022); Guenette, Kose, and Sugawara (2022); Haver Analytics; Oxford Economics; World Bank.

      Note: AEs = advanced economies; EMDEs = emerging market and developing economies; LICs = low-income countries; Fragile LICs = LICs with fragile and conflict affected situations. Unless indicated, aggregate growth rates calculated using real U.S. dollar GDP weights at average 2010-19 prices and market exchange rates. Data are estimates for 2022 and forecasts for 2023-24.

      A.B. Scenarios use Oxford Economics Global Economic Model.

      B. Growth aggregates computed by Oxford Economics using 2015 market exchange rates and prices.

      C. Bars show the number of people in food crisis as classified by the Integrated Food Security Phase Classification (IPC/CH) Phase 3, that is, in acute food insecurity crisis or worse. Data for 2022 are estimates adapted from GNAFC (2022).

      D. Bars indicate the change in public and private bond issuance during the ten months after the start of the event compared to the same period one year prior. The starting dates are August 2008 for Global financial crisis, June 2013 for Taper tantrum, March 2020 for COVID-19, and February 2022 for 2022.

      E. Deviation between current forecasts and those of the January 2020 Global Economic Prospects report. For 2024, the January 2020 baseline is extended using projected growth for 2022.

      F. Figure shows expected losses over 2020-24 relative to pre-pandemic trend as a percentage of 2019 GDP. Pre-pandemic trend based on January 2020 baseline extended using 2022 projections.

      The weak global outlook and the heightened downside risks highlight the challenges facing policy makers around the world. Urgent action is needed to attenuate the risk of global recession stemming, in part, from the fastest and most synchronized monetary tightening in decades. As they focus on reducing record-high inflation, central banks in advanced economies and EMDEs need to take into account the possibility that cross-border spillovers from other monetary authorities’ actions may tighten financial conditions more than expected. Discussions among central banks can help mitigate risks associated with financial stability and avoid an excessive global economic slowdown in the pursuit of inflation objectives.

      The international community needs to intensify its support to large numbers of displaced people and others affected by conflict or food insecurity, particularly in LICs (figure 1.2.C). In responding to food and energy shocks, governments need to avoid imposing export restrictions and instead attenuate the impact on the poor through support measures targeted at low-income groups. The international community also needs to reduce the risk of debt crises in EMDEs, including by supporting timely debt restructuring. Given the rising human and economic costs of more frequent climate-related disasters, particularly in small states, speedy action to foster the energy transition is critical for mitigating climate change.

      Global efforts need to be complemented by decisive policy action at the national level. While monetary policy cycles are peaking in some EMDEs, further tightening may be needed in others to rein in inflation. Financial stability risks stoked by global and domestic policy tightening can be mitigated by strengthening macroprudential regulation and promptly addressing financial vulnerabilities such as rising nonperforming loans. Preemptively alleviating currency mismatches in EMDE corporate and financial sectors with proper financial policy can also reduce crisis risks. EMDE policy makers can take steps to bolster foreign exchange buffers as appropriate, which can be utilized in episodes of excessive volatility. Deployed appropriately, foreign exchange interventions can help stem temporary exchange rate pressures.

      Tighter financing conditions, weaker growth, and elevated debt levels create significant fiscal challenges for EMDEs, exemplified by the recent precipitous fall in bond issuance (figure 1.2.D). Timely and carefully calibrated fiscal consolidation needs to be guided by credible medium-term frameworks, with a focus on reducing wasteful spending, such as inefficient agricultural and fuel subsidies, and ensuring that support for the poor and most vulnerable is well-targeted. Although increasing tax rates may be a challenge in the near term given weak growth prospects, revenues can nonetheless be bolstered by broadening the tax base through removing exemptions, progressively expanding coverage of under-taxed activities, and strengthening collection and administration mechanisms.

      The long-term scarring effects of the overlapping adverse shocks of the past three years have led to large cumulative losses, especially with respect to EMDE output and investment (figure 1.2.E). These losses would be even larger in a sharper global downturn or recession (figure 1.2.F). To offset these losses and bolster green, resilient, and inclusive growth, EMDEs will need to make substantial investments in all forms of capital—human, physical, social, and natural. Given limited fiscal space, these investments will require private-sector involvement and new concessional financing from the international community. This can be complemented by structural reforms that improve the investment climate and reallocate public expenditures toward growth-enhancing investment. Such efforts will need to be accompanied by measures to strengthen social protection systems, foster gender equality, promote investments in human capital, and facilitate more resilient food systems.

      Global context

      Weakening global demand is weighing on global trade. Most commodity prices have eased, to varying degrees, although they are expected to remain well above their average of the past five years. High inflation is expected to persist for longer than previously expected. Monetary tightening and risk aversion have led to widespread currency depreciations and steep capital outflows from EMDEs.

      Global trade

      Global trade growth decelerated in the second half of 2022, in tandem with deteriorating activity in major economies. Weakening trade mirrored the slowdown in global industrial production, as demand shifted toward its pre-pandemic composition and away from goods. Despite this moderation, goods trade surpassed pre-pandemic levels last year; meanwhile, services trade continued to recover, supported by the gradual shift in demand toward services. Tourism flows rebounded as many countries eased travel restrictions but remained well below pre-pandemic levels and uneven across regions (WTO 2022).

      Although global supply chain pressures are still above pre-pandemic levels, they have eased since mid-2022, as reflected in lower transportation costs and normalization of inventories (figures 1.3.A and 1.3.B). Weakening demand for goods is expected to reduce these pressures further in 2023.

      FIGURE 1.3 Global trade

      Supply chain pressures continue to ease and are returning to historical averages amid rising inventories and falling shipping costs, while supplier delivery times are increasing at a slower pace. Global trade growth has been revised down substantially, in part reflecting deteriorating global demand. The recovery of global trade following the 2020 global recession is on course to be substantially weaker than the rebounds seen after previous global recessions.

      Sources: Federal Reserve Bank of New York; Haver Analytics; Kose, Sugawara, and Terrones (2020); World Bank.

      A. Figure shows the Global Supply Chain Pressure Index, as produced by the Federal Reserve Bank of New York. The index is normalized such that zero indicates the average value for the period January 1998-November 2022, while positive (negative) values represent how many standard deviations the index is above (below) the average value. Last observation is November 2022.

      B. Figure shows manufacturing Purchasing Managers’ Index (PMI) subcomponents. PMI data for delivery times are inverted by subtracting data from 100; therefore, increasing (decreasing) PMI data indicate faster (slower) delivery times. Last observation is November 2022.

      C. Trade is measured as the average of export and import volumes. June 2022 refers to forecasts presented in the June 2022 edition of the Global Economic Prospects report.

      D. Figure shows global trade recoveries after global recessions (1975, 1982, 1991, 2009, and 2020). Global recession is defined as a contraction in global per capita GDP, as described in Kose, Sugawara, and Terrones (2020).

      After softening to 4 percent in 2022, global trade growth is expected to decelerate further to 1.6 percent in 2023, largely reflecting weakening global demand (figure 1.3.C). Trade is envisaged to be particularly subdued in EMDEs with strong trade linkages to major economies where demand is expected to slow sharply. In all, the current post-recession rebound in global trade is on course to be among the weakest on record (figure 1.3.D). Travel and tourism are expected to pick up further but will be constrained by slower global activity and high input costs. Goods trade is expected to moderate owing to subdued demand and a gradual shift in consumption toward services.

      Weaker-than-expected global demand and renewed supply chain bottlenecks pose downside risks to the global trade outlook. In addition, an intensification in trade protectionism, fragmentation of trade networks, and security concerns about supply chains could increase trade costs and slow trade growth (Góes and Bekkers 2022; Rubínová and Sebti 2021).

      Commodity markets

      Most commodity prices have eased since June, to varying degrees, due to slowing global growth (figure 1.4.A; World Bank 2022a). Oil prices declined from their mid-2022 peak amid demand concerns; for the year as a whole, the price of Brent crude oil averaged $100/bbl. European natural gas prices surged to an all-time high in August but have since fallen back toward pre-invasion levels as inventories filled and mild weather reduced demand for natural gas for heating. Coal prices reached a record high in the third quarter before starting to soften in the fourth.

      FIGURE 1.4 Commodity markets

      Most commodity prices have eased due to slowing global growth. Metals demand growth has seen a particularly marked slowdown. Concerns about food availability due to the invasion of Ukraine resulted in a number of countries implementing food export restrictions in 2022. OPEC+ announced a 2 mb/d reduction in their production target; however, the group is already producing below their official target.

      Sources: Bloomberg; IEA (2022a); Laborde and Mamun (2022); World Bank; World Bureau of Metal Statistics.

      Note: OPEC = Organization of the Petroleum Exporting Countries.

      A. Last observation is November 2022.

      B. Figure shows percent change in metal demand relative to same period in previous year. Last observation is September 2022.

      C. Bars show the peak of number of countries during each period implementing food export restrictions.

      D. Figure shows the difference in crude oil production compared to the target set by OPEC+ countries for 2022 based on IEA (2022a).

      Meanwhile, metal prices fell in the second half of 2022 owing to slowing demand, particularly from China (figure 1.4.B; Baumeister, Verduzco-Bustos, and Ohnsorge 2022). Agricultural prices remain high but have also declined, particularly for wheat and vegetable oils, reflecting higher-than-expected crop yields, as well as a resumption of some exports from Ukraine. Concerns about food availability due to the invasion of Ukraine prompted many countries to impose export bans and other trade restrictions (figure 1.4.C). The extent of these restrictions, in both absolute numbers and as a share of caloric intake, have been comparable with those during the 2008 food price spike. However, because recent restrictions have been applied to a broad set of commodities, they have not affected global markets as much as those imposed in 2008 (which were applied mostly to rice and wheat and were also accompanied by large purchases from major importers).

      Currency depreciations in many countries have resulted in higher commodity prices in local currency terms compared to the price in U.S. dollars. For instance, from February to November 2022, the price of Brent crude oil in U.S. dollars fell nearly 5 percent, but rose by 7 percent in domestic currency terms, on average, in advanced economies (excluding the United States) and by 5 percent in oil-importing EMDEs. As a result, commodity-driven inflationary pressures in many countries may be more persistent than indicated by recent declines in global commodity prices.

      Going forward, energy prices are expected to ease in 2023 but remain higher than previously forecast, primarily reflecting an upward revision to coal prices. Crude oil prices are projected to moderate to an average of $88/bbl in 2023, $4/bbl below previous projections. The downward revision is primarily due to slower global growth and the subsequent weakness in oil demand in 2023, particularly in Europe. Russian oil exports are expected to fall in 2023 due to additional EU sanctions that started in December 2022 for crude oil and will begin in February 2023 for oil products. The overall reduction in Russia’s exports is likely to be smaller than initially expected, however, as the G7 oil price cap will enable countries that import oil from Russia to continue to access EU and UK insurance services, provided they adhere to the price cap (IEA 2022a). Beyond Russia, oil supply will increase modestly, mainly from the United States, while OPEC+ output will remain subject to their production agreement.

      For natural gas, annual average prices are forecast to moderate in 2023. Demand for natural gas is expected to decline in 2023 as households and industrial users reduce consumption, while rapid growth in renewable energy generation will help moderate demand for natural gas for electricity generation. Nonetheless, further price spikes are possible. Exports from Russia are envisaged to remain significantly lower than before the onset of the war in Ukraine. In addition, competition for liquefied natural gas (LNG) will remain intense at the global level, as European countries continue to import large volumes of LNG to replace lower imports from Russia. Coal prices will ease from extremely elevated levels as production rises, especially in China and India.

      The main downside risk to the energy price forecast is weaker-than-expected global growth. Oil consumption could also be lower as a result of more persistent pandemic-related restrictions in China. Upside risks chiefly relate to supply factors. U.S. shale oil production could disappoint as producers focus on returning cash to shareholders rather than increasing production. Disruption to Russia’s exports could be larger than expected, while a cessation of the war in Ukraine could ease supply issues. Spare capacity among OPEC members is minimal, and OPEC+ members continue to produce well below target, in part because of low levels of investment in new production in recent years (figure 1.4.D). In addition, strategic inventories have been drawn down, leaving limited buffers in the event of unexpected new shocks. For natural gas and, to a lesser extent, coal, a cold winter in Europe could cause natural gas inventories to fall to very low levels, requiring additional refilling in 2023, and Europe could struggle to refill inventories ahead of the 2023 winter season.

      Agricultural prices are projected to decline 5 percent in 2023 after rising 13 percent in 2022, largely reflecting better global production prospects and easing input costs, particularly for fertilizers. However, prices are expected to remain above pre-pandemic levels. Upward risks to food prices include the possibility that fertilizer prices

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