Major banks expect a slowdown in the global economy in 2023
2022.11.30 09:07
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Major banks expect a slowdown in the global economy in 2023
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 implementing its first hike in March, the Federal Reserve of the United States has increased interest rates by 375 basis points this year.
Even though the central bank is expected to slow down its rate of interest rate increases, this has raised concerns about a recession:
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%
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%
Morgan Stanley predicts that the Fed will cut rates for the first time in December 2023, bringing the benchmark rate to 4.375 percent by the end of that year. 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.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 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 (NYSE:) 1.01 – 1.09 130 – 140
Most banks see the euro falling below parity to the dollar during the year, before clawing back by year-end.
As of 1315 GMT on Nov. 30, 2022:
EUR/USD: 1.038
: 7.07
USD/JPY: 138.75
: 3.72%
S&P 500 level (as of close on Nov. 29): 3,957.63
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