The year ahead will see peak inflation and a global economic slowdown heightened as interest rates work their way through the markets, says IG Wealth Management's ‘2023 Market Outlook ‒ Navigating the peaks and troughs.’ "Central bankers in 2022 have continued to signal that a slowing economy is necessary to fight inflation, but the force and impact of a possible recession may prove to be shorter, and milder, than historical averages," says Philip Petursson, chief investment strategist at IG. "Peak inflation, interest rates, and asset class correlation, with equity prices hitting their lows, will present opportunities to investors who are able to navigate the market environment." With North America, Europe, and Asia all experiencing recessionary conditions, including a slowdown in global manufacturing activity, it believes that the risk of recession is global. However, the money supply growth rate – the primary ‘excess’ condition contributing to inflation – has already fallen back to historical levels in the U.S., Canada, and other regions around the world. Further, the strength of the current labour market could keep an economic contraction more muted in North America, pointing to a recession that may be more in name only, it says.
- PWC