Another year has come to an end & all eyes are set on 2023 to see what economic development it will bring, will it offer some much needed respite or will it add to our woes?
Hereβs what JP Morgan's Investment Outlook report 2023 has to sayπ§΅:
Hereβs what JP Morgan's Investment Outlook report 2023 has to sayπ§΅:
1a) Housing π« to slow down, but not like the crisis of 2008
The report states that there are convincing signs that inflation is moderating & will continue to do so in 2023.
Housing activity everywhere will slow down in response to banks raising rates, this will tame inflation.
The report states that there are convincing signs that inflation is moderating & will continue to do so in 2023.
Housing activity everywhere will slow down in response to banks raising rates, this will tame inflation.
1b) However, there is a low risk of a housing-led recession of 2008, primarily because the construction activity in the last decade was relatively subdued, so a glut of oversupply unlikely to happen.
2) Europe is handling the energy crisis well
The energy crisis that seemed inevitable at the beginning of the year, looks more manageable now.
With liquified natural gas from the US replacing the Russian gas, the need for energy rationing might not arise.
The energy crisis that seemed inevitable at the beginning of the year, looks more manageable now.
With liquified natural gas from the US replacing the Russian gas, the need for energy rationing might not arise.
3) Global supply chain pressure will ease up post-Covid crises in China
Opening China's economy could have a significant effect on inflation as the pressure on the global supply chain will ease up.
A return to full production should ease inflation through the course of 2023.
Opening China's economy could have a significant effect on inflation as the pressure on the global supply chain will ease up.
A return to full production should ease inflation through the course of 2023.
4) Inflation panic will subside in 2023
As the west slows down and China resumes full-steam production, inflationary pressures should ease out in 2023.
As the west slows down and China resumes full-steam production, inflationary pressures should ease out in 2023.
5) Recessions to be modest
Ultimately, consistent weakening economic activity will reduce inflation. It is unlikely that this time around there will be a deep recession that follows a boom as the investment and housing growth has been modest.
Ultimately, consistent weakening economic activity will reduce inflation. It is unlikely that this time around there will be a deep recession that follows a boom as the investment and housing growth has been modest.
6) Healthy financial sector will prevent any calamities
After a decade since the global financial crisis, commercial banks are much better capitalized, regulated, and prepared to handle any losses without the need for a credit crunch.
After a decade since the global financial crisis, commercial banks are much better capitalized, regulated, and prepared to handle any losses without the need for a credit crunch.
7) If inflation is controlled, a deep recession is unlikely
Busts follow booms. But booms were notably absent in the last decade. The already declining price of stocks & bonds makes a deep recession unlikely.
Busts follow booms. But booms were notably absent in the last decade. The already declining price of stocks & bonds makes a deep recession unlikely.
8) In conclusion, the report points out that while 2023 will be a difficult year for economies, the worst of the market volatility is behind us and both stocks & bonds look increasingly attractive.
Like this thread? Check out our previous thread on Goldman Sach's Global Economics Analyst Macro Outlook 2023 report.
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