Economic Outlook Grows Murkier

As the year progresses, the 2023 outlook has become murkier rather than clearer, says AB’s ‘Global Economic Outlook Second Quarter 2023.’ In addition to an ongoing inflation problem, policymakers and investors alike now grapple with financial sector turmoil, it says, making its base case that the turmoil won’t become a full-blown crisis, but it’s too early to be sure. The financial sector is where small problems go to become big crises, it says, and any investor ignoring that possibility is disregarding one of history’s big lessons: when central banks raise rates, things break. Despite that sobering prelude, it says this episode is unlikely to disrupt the global economy as much as past crises.