about 1 year ago • 2 mins
Now that 2022’s rowdy reign is finally over, let’s find out if 2023 looks like your chance to blow off steam – or the hangover from hell.
What does this mean?
If one of your New Year’s resolutions is to adopt mindfulness and a positive attitude, you might want to start early. See, 2023 isn’t exactly promising to be the champagne-popping, caviar-downing, throw-your-budgets-out-the-window bonanza you’re hoping for: inflation should ease up, yes, but aftershocks from war-induced energy shortages and central banks’ relentless rate hikes are set to wreak more havoc.
In fact, economists predict the global economy will grow just (time for that deep-breathing practice) 2.4% next year, the lowest in three decades besides the disastrous 2009 and 2020. Still, we’ll take any growth when most pros are predicting full-blown recessions. Case in point: economists at both Citi and abrdn forecast the UK and Europe will likely enter the new year in a (deep breath in) recession, with the US following in the second half of 2023. Uh… you can breathe normally again now.
Why should I care?
For markets: Team U-S-A!
The US dollar’s been leading the pack this year, and – despite its recent stumble – it’ll probably stay strong next year. After all, investors tend to flock toward safer assets in uncertain times (read: recessions), and the dollar’s a tried-and-tested bet. So even though greenback-bolstering rate hikes are slowing down, traders still predict the dollar will hold its current value this time next year.
Zooming out: Unleash the beast.
Here’s the exciting bit: one major economy is expected to dodge the economy-busting bullet altogether. China’s forecast to grow over 5% next year, as the country relaxes its uncompromising zero-Covid stance and lets pent-up consumer demand go wild. That should wake up China’s slumbering companies, and the government’s business-supporting policy plans won’t hurt either. Add economy-boosting rate cuts to the mix, and you’ve got all the ingredients of a successful comeback.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.