Economic forecast for 2023 overshadows-World Banks
2022.12.09 03:09
Economic forecast for 2023 overshadows-World Banks
Budrigannews.com – After a year marked by turmoil caused by the conflict in Ukraine and skyrocketing inflation, which resulted in one of the quickest monetary policy tightening cycles in recent history, the largest investment banks in the world anticipate that global economic growth will slow further in 2023.
Since its first increase in March, the Federal Reserve of the United States has raised concerns about a recession by 375 basis points this year.
Real GDP (annual Y/Y) forecasts for 2023:
Bank Global U.S. China
Morgan Stanley (NYSE:) 2.20% 0.50% 5%
Goldman Sachs (NYSE:) 1.80% 1% 4.50%
Barclays (LON:) 1.70% -0.1% 3.80%
J.P.Morgan 1.6% 1% 4%
BNP Paribas (OTC:) 2.3% -0.10% 4.50%
UBS 2.1% 0.1% 4.5%
BofA 2.3% -0.4% 5.5%
Credit Suisse 1.6% 0.8% 4.5%
Deutsche Bank (ETR:) ~2% 0.8% 4.5%
Citi 1.9% 0.7% 5.6%
Wells Fargo (NYSE:) 1.7% 0.2% 4.9%
U.S. inflation forecast for 2023 and Fed terminal rate forecast:
Bank U.S. Inflation Fed Terminal Rate
(annual Y/Y for
2023)
Morgan Stanley Headline CPI: 4.625% (by Jan ’23)
3.3%Core PCE: 3.8%
Goldman Sachs Headline CPI: 3.2% 5 – 5.25%
Core CPI: 3.2% (by May ’23)
Core PCE: 2.9%
Barclays Headline CPI: 3.70% 5% – 5.25% (by March
’23)
J.P.Morgan Headline CPI: 5% (by Jan ’23)
4.1%Core CPI: 4.2%
BNP Paribas Headline CPI: 4.40% 5% – 5.25% (by Q1 ’23)
UBS Headline CPI: 3.6% 5%
BofA Headline CPI: 4.4% 5% – 5.25%(by March
’23)
Credit Suisse Headline CPI: 3.8% 4.75% – 5% (by March
’23)
Deutsche Bank Headline CPI: 4.3% 5.125% (by March ’23)
Citi Headline CPI: 4.1% 5.25% – 5.5%
Wells Fargo Headline CPI: 3.8% 5% – 5.25%(by March
’23)
Morgan Stanley sees the Fed conveying its top notch cut by December 2023, taking the benchmark rate to 4.375% before that year’s over. By the end of next year, the rate is expected to be between 4.25 and 4.5 percent, according to Barclays and Deutsche Bank, respectively.
By the end of 2023, UBS anticipates that U.S. inflation will be “close enough” to the Fed’s 2% target to warrant rate cuts.
Wells Fargo anticipates that the Fed will begin its cycle of easing in early 2024. By the end of 2024, BofA anticipates a rate between 2.75 and 3 percent.
By the end of 2023, the following are forecasts for currency pairs and yields on U.S. 10-year Treasuries:
Bank USD/ S&P 500 U.S.
CNY Target (NYSE:) 10-year
yield
Morgan Stanley 1.08 6.8 140 3,900 3.50%
Goldman Sachs 1.05 6.9 140 4,000 4.34%
Barclays 1.05 7.3 131 3.75%
J.P.Morgan 1.0 7.2 133 4,200 3.4%
BNP Paribas 1.06 6.9 128 3,400 3.50%
UBS 1.04 6.9 135 3,700 3%
(by June
2023)
BofA 1.1 7 137 4,000 3.25%
Credit Suisse 1.02 7.3 135 4.10%
Deutsche Bank 1.1 6.8 125 4,500 3.65%
Citi 1.15 6.90 133 4.35%
Wells Fargo 1.01 – 1.09 130 – 140 3.25%
Most banks see the euro falling below parity to the dollar during the year, before clawing back by year-end.
As of 0720 GMT on Dec. 9, 2022:
EUR/USD: 1.057
: 6.95
USD/JPY: 136.25
: 3.46%
S&P 500 level (as of close on Dec. 8): 3,963.51
