(Finance) – The prospects for the 2023 they have been revised downwards, with a technical recession in sight in the coming quarters in developed countries. Emerging countries, particularly Asia, offer relatively more constructive prospects, as China is expected to experience stronger growth in the 2023. Inflation is expected to decline from its peak, but only gradually, leaving inflation still above 2% in 2023. Tight monetary policy is expected to remain in place for the next few quarters as central bankers focus on fighting inflation at the expense of growth and employment. This is what we read in the analysis by Norman Villamin, Chief Investment Officer (Wealth Management) from Union Bancaire Privée
Asia, relatively more constructive prospects for 2023 – The economic activity in China – we read – should benefit from the renewed fiscal and monetary measures. As a result, growth in 2023 is expected to reach 5.2%, as the obstacles stemming from Covid policy and the real estate sector are expected to be less severe.
Asian countries are expected to record aggregate growth of 4.2% in 2023, as positive demographic trends and solid fundamentals help the region grow despite the strength of the dollar and the rise in key rates in 2022.
United States: The Fed is aiming for a slowdown in domestic demand to reduce inflation – US domestic demand is expected to slow significantly in the coming quarters, in the face of still high inflation and tighter financial conditions. Job creation is also expected to slow down. Downside risks point to a deeper contraction in demand and a major labor market turnaround rather than the Fed’s expected soft landing.
Europe: growing risks of a deep and lasting recession The UK and the Eurozone – Villamin writes – are the regions most exposed to the energy crisis, with inflation still not reaching its peak, forcing central banks to shift interest rates to more restrictive territory. Activity is expected to contract in the coming quarters and could remain depressed until the second quarter of 2023. The risks of gas and electricity rationing during the winter are significant, despite efforts by governments to save energy and to limit gas and electricity prices with new targeted support.