Polls of economists at the end of 2022 in weAnd Euro-zone And United kingdom It was relentlessly grim, peppered with predictions of a recession, higher unemployment, and continuing inflation problems. The head of the International Monetary Fund, Kristalina Georgieva, Speaking of tougher 12 months ago It predicts that a third of the world will suffer from recession. It’s frustrating stuff. Fortunately, these accounts may be wrong. We should all cheer up a bit.

The evidence suggests that economic performance in 2023 will not be as bad as most economists say. We will probably end the year richer, safer and more content than we did at the beginning.

There is no doubt that the global backdrop of 2023 is challenging. Households and businesses have weathered the pandemic, inflation, record energy costs, and food price crisis over the past three years. But the worst effects of it are already over.

Therefore, part of my larger optimism is based on an important and near-universal misunderstanding of economic forecasts. Often, past events are presented as yet to come.

International Monetary Fund Latest forecast From October, for example, he predicted global growth would drop from 3.2 percent in 2022 to 2.7 percent in 2023. This reinforced Georgieva’s comment that this year would be “tougher than the year we leave behind.” The problem is that the information conveyed by these average annual growth rates does not fit into the reasonable interpretation of most people.

It might surprise you that in the fund’s case, the relatively strong 2022 reading is due to rapid growth at the end of the lockdown in late 2021 and the expectation of weakness for 2023 is primarily due to the energy crisis of the previous year.

Translated into economic activity that only takes place during the year in question – in line with most forecasters’ expectations – the story changes completely. In contrast to next year, the International Monetary Fund expects the global economy to grow by 2.7 percent during 2023, which is significantly more than the 1.7 percent that is believed to have occurred during 2022.

The IMF is not alone in providing key growth forecasts that its officials find difficult to articulate. Organization for Economic Co-operation and Development he said in november That growth in advanced economies will decline in 2023, however Quarterly forecasts From the same publication it appears that it expects the growth of advanced economies to improve in each quarter of this year. Most people would see this as progress rather than regression.

These failures to translate numerical projections into a compelling and accurate narrative should cause us concern. It creates an unnecessarily bleak outlook that has self-fulfilling characteristics.

Recognizing these supply issues should make us happier by 2023. But few FT readers will fail to notice the second problem with these forecasts: they are outdated. Any assessment for the coming year must take into account two important changes in the assumptions underlying the global outlook.

The first reflects natural gas prices. The IMF and OECD forecasts were prepared in the fall and were based on financial market projections of future natural gas prices at that time. The Organization for Economic Co-operation and Development, for example, has predicted that wholesale gas prices in Europe will average €150 per megawatt-hour over this year and next.

Current market expectations are for prices to be around half that level. The easing of the energy crisis is an impeccable boost to the European economic outlook. Lower energy prices will improve income, growth and fiscal prospects while lowering headline inflation. This is of crucial importance for Europe, which is a large energy importer.

The second change in assumptions must take into account China’s termination of its policy on the non-spread of the coronavirus. The virus is creating misery for many, but deregulation is likely to be positive for both the Chinese and global economic prospects later this year.

India’s devastating delta wave in the spring of 2021 led to a greater than 8 percent drop in gross domestic product in the second quarter of that year, followed by a similar rise in the third quarter and another 5 percent gain in the fourth quarter. After the current wave of infections, China’s economic rebound should be stronger, if anything, because ending forced lockdowns will ease supply chain pressures. Global trade bottlenecks must improve.

We must of course not get swept up in a wave of optimism. Even with lower inflation, battles between workers, businesses, and taxpayers over accumulated losses from the economic crises of recent years could continue. Olivier Blanchard, former chief economist at the International Monetary Fund, also warned that it could keep price increases too high for a very long time. Likewise, the huge uncertainty about the severity of these conflicts may cause central banks to over-control inflation and undermine economic progress. Macroeconomic policy errors are thus highly likely in 2023.

But uncertainty of this kind is an ongoing fact of life. As the year begins, we can say the following with some confidence. Almost all current forecasts indicate that growth in the global economy is likely to improve in 2023 and the future outlook will remain more optimistic. Contrary to the dismal comments from economists and officials, we should be cautiously optimistic about the coming year.

chris.giles@ft.com