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Economics Fixed Income Commentary

Global Macro Outlook - Second Quarter 2023

April 06, 2023
5 min read

What You Need To Know

Besides inflation and tight monetary policy, a banking crisis has added to investor anxieties. The bank turmoil won’t likely be a drag to global financial markets. But it does argue for caution when combined with our broader expectations of a sustained period of below-trend growth.

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Key Forecast Trends

  • The 2023 outlook has become murkier rather than clearer. In addition to an ongoing inflation problem, policymakers and investors alike now grapple with financial sector turmoil.
  • Services inflation in particular shows few signs of slowing as yet, and we expect that it will take a prolonged period of below-trend growth to bring price pressures under control. In that respect, the impact of the banking turmoil may prove helpful.
  • In Europe, a mild winter and sharp decline in natural gas prices have mitigated much of the downside economic risk we identified last year.
  • China has fully reopened its economy from pandemic-led shutdowns, and we expect no further disruptions.
  • We expect only a mild recession in most regions and a considerably brighter outlook toward year-end.   For investors, this argues for caution, not panic.
The Global Cycle for 2Q:2023

Global Forecast

Forecast Overview

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