Markets
The World’s Most Famous Case of Deflation
The World’s Most Famous Case of Deflation (Part 1 of 2)
The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.
The Great Depression was the most severe economic depression ever experienced by the Western world.
It was during this troubled time that the worldโs most famous case of deflation also happened. The resulting aftermath was so bad that economic policy since has been chiefly designed to prevent deflation at all costs.
Setting the Stage
The transition from wartime to peacetime created a bumpy economic road after World War I.
Growth has hard to come by in the first years after the war, and by 1920-21 the economy fell into a brief deflationary depression. Prices dropped -18%, and unemployment jumped up to 11.7% in 1921.
However, the troubles wouldn’t last. During the “Roaring Twenties”, economic growth picked up as the new technologies like the automobile, household appliances, and other mass-produced products led to a vibrant consumer culture and growth in the economy.
More than half of the automobiles in the nation were sold on credit by the end of the 1920s. Consumer debt more than doubled during the decade.
While GDP growth during this period was extremely strong, the Roaring Twenties also had a dark side. Income inequality during this era was the highest in American history. By 1929, the income of the top 1% had increased by 75%. Income for the rest of people (99%) increased by only 9%.
The Roaring Twenties ended with a bang. On Black Thursday (Oct 24, 1929), the Dow Jones Industrial Average plunged 11% at the open in very heavy volume, precipitating the Wall Street crash of 1929 and the subsequent Great Depression of the 1930s.
The Cause of the Great Depression
Economists continue to debate to this day on the cause of the Great Depression. Hereโs perspectives from three different economic schools:
Keynesian:
John Maynard Keynes saw the causes of the Great Depression hinge upon a lack of aggregate demand. This later became the subject of his most influential work, The General Theory of Employment, Interest, and Money, which was published in 1936.
Keynes argued that the solution was to stimulate the economy through some combination of two approaches:
1. A reduction in interest rates (monetary policy), and
2. Government investment in infrastructure (fiscal policy).
โThe difficulty lies not so much in developing new ideas as in escaping from old ones.โ โ John Maynard Keynes
Monetarist:
Monetarists such as Milton Friedman viewed the cause of the Great Depression as a fall in the money supply.
Friedman and Schwartz argue that people wanted to hold more money than the Federal Reserve was supplying. As a result, people hoarded money by consuming less. This caused a contraction in employment and production since prices were not flexible enough to immediately fall.
โThe Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.โ โ Milton Friedman
Austrian:
Austrian economists argue that the Great Depression was the inevitable outcome of the monetary policies of the Federal Reserve during the 1920s.
In their opinion, the central bank’s policy was an “easy credit policy” which led to an unsustainable credit-driven boom.
โAny increase in the relative size of government in the economy, therefore, shifts the societal consumption-investment ratio in favor of consumption, and prolongs the depression.โ – Murray Rothbard
The Great Depression and Deflation
Between 1929 and 1932, worldwide GDP fell by an estimated 15%.
Deflation hit.
Personal income, tax revenue, profits and prices plunged. International trade fell by more than 50%. Unemployment in the U.S. rose to 25% and in some countries rose as high as 33%.
These statistics were only the tip of the iceberg. Learn about the full effects, the stories, and the recovery from the Great Depression in Part 2.
About the Money Project
The Money Project aims to use intuitive visualizations to explore ideas around the very concept of money itself. Founded in 2015 by Visual Capitalist and Texas Precious Metals, the Money Project will look at the evolving nature of money, and will try to answer the difficult questions that prevent us from truly understanding the role that money plays in finance, investments, and accumulating wealth.
Markets
Mapped: GDP Growth Forecasts by Country, in 2023
The global economy faces an uncertain future in 2023. This year, GDP growth is projected to be 2.9%โdown from 3.2% in 2022.

Mapped: GDP Growth Forecasts by Country, in 2023
This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.
Since Russiaโs invasion of Ukraine early last year, talk of global recession has dominated the outlook for 2023.
High inflation, spurred by rising energy costs, has tested GDP growth. Tightening monetary policy in the U.S., with interest rates jumping from roughly 0% to over 4% in 2022, has historically preceded a downturn about one to two years later.
For European economies, energy prices are critical. The good news is that prices have fallen recently since March highs, but the continent remains on shaky ground.
The above infographic maps GDP growth forecasts by country for the year ahead, based on projections from the International Monetary Fund (IMF) October 2022 Outlook and January 2023 update.
2023 GDP Growth Outlook
The world economy is projected to see just 2.9% GDP growth in 2023, down from 3.2% projected for 2022.
This is a 0.2% increase since the October 2022 Outlook thanks in part to Chinaโs reopening, higher global demand, and slowing inflation projected across certain countries in the year ahead.
With this in mind, we show GDP growth forecasts for 191 jurisdictions given multiple economic headwindsโand a few emerging bright spots in 2023.
Country / Region | 2023 Real GDP % Change (Projected) |
---|---|
๐ฆ๐ฑ Albania | 2.5% |
๐ฉ๐ฟ Algeria | 2.6% |
๐ฆ๐ด Angola | 3.4% |
๐ฆ๐ฌ Antigua and Barbuda | 5.6% |
๐ฆ๐ท Argentina* | 2.0% |
๐ฆ๐ฒ Armenia | 3.5% |
๐ฆ๐ผ Aruba | 2.0% |
๐ฆ๐บ Australia* | 1.6% |
๐ฆ๐น Austria | 1.0% |
๐ฆ๐ฟ Azerbaijan | 2.5% |
๐ง๐ญ Bahrain | 3.0% |
๐ง๐ฉ Bangladesh | 6.0% |
๐ง๐ง Barbados | 5.0% |
๐ง๐พ Belarus | 0.2% |
๐ง๐ช Belgium | 0.4% |
๐ง๐ฟ Belize | 2.0% |
๐ง๐ฏ Benin | 6.2% |
๐ง๐น Bhutan | 4.3% |
๐ง๐ด Bolivia | 3.2% |
๐ง๐ฆ Bosnia and Herzegovina | 2.0% |
๐ง๐ผ Botswana | 4.0% |
๐ง๐ท Brazil* | 1.2% |
๐ง๐ณ Brunei Darussalam | 3.3% |
๐ง๐ฌ Bulgaria | 3.0% |
๐ง๐ซ Burkina Faso | 4.8% |
๐ง๐ฎ Burundi | 4.1% |
๐จ๐ป Cabo Verde | 4.8% |
๐จ๐ฒ Cameroon | 4.6% |
๐ฐ๐ญ Cambodia | 6.2% |
๐จ๐ฆ Canada* | 1.5% |
๐จ๐ซ Central African Republic | 3.0% |
๐น๐ฉ Chad | 3.4% |
๐จ๐ฑ Chile | -1.0% |
๐จ๐ณ China* | 5.3% |
๐จ๐ด Colombia | 2.2% |
๐ฐ๐ฒ Comoros | 3.4% |
๐จ๐ท Costa Rica | 2.9% |
๐จ๐ฎ Cรดte d'Ivoire | 6.5% |
๐ญ๐ท Croatia | 3.5% |
๐จ๐พ Cyprus | 2.5% |
๐จ๐ฟ Czech Republic | 1.5% |
๐จ๐ฉ Democratic Republic of the Congo | 6.7% |
๐ฉ๐ฐ Denmark | 0.6% |
๐ฉ๐ฏ Djibouti | 5.0% |
๐ฉ๐ฒ Dominica | 4.9% |
๐ฉ๐ด Dominican Republic | 4.5% |
๐ช๐จ Ecuador | 2.7% |
๐ช๐ฌ Egypt* | 4.0% |
๐ธ๐ป El Salvador | 1.7% |
๐ฌ๐ถ Equatorial Guinea | -3.1% |
๐ช๐ท Eritrea | 2.9% |
๐ช๐ช Estonia | 1.8% |
๐ธ๐ฟ Eswatini | 1.8% |
๐ช๐น Ethiopia | 5.3% |
๐ซ๐ฏ Fiji | 6.9% |
๐ซ๐ฎ Finland | 0.5% |
๐ซ๐ท France* | 0.7% |
๐ฒ๐ฐ North Macedonia | 3.0% |
๐ฌ๐ฆ Gabon | 3.7% |
Georgia | 4.0% |
Germany* | 0.1% |
Ghana | 2.8% |
Greece | 1.8% |
Grenada | 3.6% |
Guatemala | 3.2% |
Guinea | 5.1% |
Guinea-Bissau | 4.5% |
Guyana | 25.2% |
Haiti | 0.5% |
Honduras | 3.5% |
Hong Kong SAR | 3.9% |
Hungary | 1.8% |
Iceland | 2.9% |
India* | 6.1% |
Indonesia* | 4.8% |
Iraq | 4.0% |
Ireland | 4.0% |
Iran* | 2.0% |
Israel | 3.0% |
Italy* | 0.6% |
Jamaica | 3.0% |
Japan* | 1.8% |
Jordan | 2.7% |
Kazakhstan* | 4.3% |
Kenya | 5.1% |
Kiribati | 2.4% |
South Korea* | 1.7% |
Kosovo | 3.5% |
Kuwait | 2.6% |
Kyrgyz Republic | 3.2% |
Lao P.D.R. | 3.1% |
Latvia | 1.6% |
Lesotho | 1.6% |
Liberia | 4.2% |
Libya | 17.9% |
Lithuania | 1.1% |
Luxembourg | 1.1% |
Macao SAR | 56.7% |
Madagascar | 5.2% |
๐ฒ๐ผ Malawi | 2.5% |
๐ฒ๐พ Malaysia* | 4.4% |
๐ฒ๐ป Maldives | 6.1% |
๐ฒ๐ฑ Mali | 5.3% |
๐ฒ๐น Malta | 3.3% |
๐ฒ๐ญ Marshall Islands | 3.2% |
๐ฒ๐ท Mauritania | 4.8% |
๐ฒ๐บ Mauritius | 5.4% |
๐ฒ๐ฝ Mexico* | 1.7% |
๐ซ๐ฒ Micronesia | 2.9% |
๐ฒ๐ฉ Moldova | 2.3% |
๐ฒ๐ณ Mongolia | 5.0% |
๐ฒ๐ช Montenegro | 2.5% |
๐ฒ๐ฆ Morocco | 3.1% |
๐ฒ๐ฟ Mozambique | 4.9% |
๐ฒ๐ฒ Myanmar | 3.3% |
๐ณ๐ฆ Namibia | 3.2% |
๐ณ๐ท Nauru | 2.0% |
๐ณ๐ต Nepal | 5.0% |
๐ณ๐ฑ Netherlands* | 0.6% |
๐ณ๐ฟ New Zealand | 1.9% |
๐ณ๐ฎ Nicaragua | 3.0% |
๐ณ๐ช Niger | 7.3% |
๐ณ๐ฌ Nigeria* | 3.2% |
๐ณ๐ด Norway | 2.6% |
๐ด๐ฒ Oman | 4.1% |
๐ต๐ฐ Pakistan* | 2.0% |
๐ต๐ผ Palau | 12.3% |
๐ต๐ฆ Panama | 4.0% |
๐ต๐ฌ Papua New Guinea | 5.1% |
๐ต๐พ Paraguay | 4.3% |
๐ต๐ช Peru | 2.6% |
๐ต๐ญ Philippines* | 5.0% |
๐ต๐ฑ Poland* | 0.3% |
๐ต๐น Portugal | 0.7% |
๐ต๐ท Puerto Rico | 0.4% |
๐ถ๐ฆ Qatar | 2.4% |
๐จ๐ฌ Republic of Congo | 4.6% |
๐ท๐ด Romania | 3.1% |
๐ท๐บ Russia* | 0.3% |
๐ท๐ผ Rwanda | 6.7% |
๐ผ๐ธ Samoa | 4.0% |
๐ธ๐ฒ San Marino | 0.8% |
๐ธ๐น Sรฃo Tomรฉ and Prรญncipe | 2.6% |
๐ธ๐ฆ Saudi Arabia* | 2.6% |
๐ธ๐ณ Senegal | 8.1% |
๐ท๐ธ Serbia | 2.7% |
๐ธ๐จ Seychelles | 5.2% |
๐ธ๐ฑ Sierra Leone | 3.3% |
๐ธ๐ฌ Singapore | 2.3% |
๐ธ๐ฐ Slovak Republic | 1.5% |
๐ธ๐ฎ Slovenia | 1.7% |
๐ธ๐ง Solomon Islands | 2.6% |
๐ธ๐ด Somalia | 3.1% |
๐ฟ๐ฆ South Africa* | 1.2% |
๐ธ๐ธ South Sudan | 5.6% |
๐ช๐ธ Spain* | 1.1% |
๐ฑ๐ฐ Sri Lanka | -3.0% |
๐ฐ๐ณ St. Kitts and Nevis | 4.8% |
๐ฑ๐จ St. Lucia | 5.8% |
๐ป๐จ St. Vincent and the Grenadines | 6.0% |
๐ธ๐ฉ Sudan | 2.6% |
๐ธ๐ท Suriname | 2.3% |
๐ธ๐ช Sweden | -0.1% |
๐จ๐ญ Switzerland | 0.8% |
๐น๐ผ Taiwan | 2.8% |
๐น๐ฏ Tajikistan | 4.0% |
๐น๐ฟ Tanzania | 5.2% |
๐น๐ญ Thailand* | 3.7% |
๐ง๐ธ The Bahamas | 4.1% |
๐ฌ๐ฒ The Gambia | 6.0% |
๐น๐ฑ Timor-Leste | 4.2% |
๐น๐ฌ Togo | 6.2% |
๐น๐ด Tonga | 2.9% |
๐น๐น Trinidad and Tobago | 3.5% |
๐น๐ณ Tunisia | 1.6% |
๐น๐ท Turkey* | 3.0% |
๐น๐ฒ Turkmenistan | 2.3% |
๐น๐ป Tuvalu | 3.5% |
๐บ๐ฌ Uganda | 5.9% |
๐บ๐ฆ Ukraine | N/A |
๐ฆ๐ช United Arab Emirates | 4.2% |
๐ฌ๐ง United Kingdom* | -0.6% |
๐บ๐ฒ U.S.* | 1.4% |
๐บ๐พ Uruguay | 3.6% |
๐บ๐ฟ Uzbekistan | 4.7% |
๐ป๐บ Vanuatu | 3.1% |
๐ป๐ช Venezuela | 6.5% |
๐ป๐ณ Vietnam | 6.2% |
West Bank and Gaza | 3.5% |
๐พ๐ช Yemen | 3.3% |
๐ฟ๐ฒ Zambia | 4.0% |
๐ฟ๐ผ Zimbabwe | 2.8% |
*Reflect updated figures from the January 2023 IMF Update.
The U.S. is forecast to see 1.4% GDP growth in 2023, up from 1.0% seen in the last October projection.
Still, signs of economic weakness can be seen in the growing wave of tech layoffs, foreshadowed as a white-collar or โPatagonia-vestโ recession. Last year, 88,000 tech jobs were cut and this trend has continued into 2023. Major financial firms have also followed suit. Still, unemployment remains fairly steadfast, at 3.5% as of December 2022. Going forward, concerns remain around inflation and the path of interest rate hikes, though both show signs of slowing.
Across Europe, the average projected GDP growth rate is 0.7% for 2023, a sharp decline from the 2.1% forecast for last year.
Both Germany and Italy are forecast to see slight growth, at 0.1% and 0.6%, respectively. Growth forecasts were revised upwards since the IMF’s October release. However, an ongoing energy crisis exposes the manufacturing sector to vulnerabilities, with potential spillover effects to consumers and businesses, and overall Euro Area growth.
China remains an open question. In 2023, growth is predicted to rise 5.2%, higher than many large economies. While its real estate sector has shown signs of weakness, the recent opening on January 8th, following 1,016 days of zero-Covid policy, could boost demand and economic activity.
A Long Way to Go
The IMF has stated that 2023 will feel like a recession for much of the global economy. But whether it is headed for a recovery or a sharper decline remains unknown.
Today, two factors propping up the global economy are lower-than-expected energy prices and resilient private sector balance sheets. European natural gas prices have sunk to levels seen before the war in Ukraine. During the height of energy shocks, firms showed a notable ability to withstand astronomical energy prices squeezing their finances. They are also sitting on significant cash reserves.
On the other hand, inflation is far from over. To counter this effect, many central banks will have to use measures to rein in prices. This may in turn have a dampening effect on economic growth and financial markets, with unknown consequences.
As economic data continues to be released over the year, there may be a divergence between consumer sentiment and whether things are actually changing in the economy. Where the economy is heading in 2023 will be anyone’s guess.
-
Technology2 days ago
Infographic: Generative AI Explained by AI
-
VC+2 weeks ago
Access Our Exclusive Report and Upcoming ‘2023 Global Forecast’ Webinar on VC+
-
Markets20 hours ago
Mapped: GDP Growth Forecasts by Country, in 2023
-
Money4 weeks ago
Ranked: The World’s Wealthiest Cities, by Number of Millionaires
-
Markets2 weeks ago
Charted: The Dipping Cost of Shipping
-
Technology4 weeks ago
Timeline: The Most Important Science Headlines of 2022
-
Technology1 week ago
Ranked: The Top 50 Most Visited Websites in the World
-
Money4 weeks ago
Visualizing $65 Trillion in Hidden Dollar Debt