BofA Global Research Offers Economic and Market Outlook for 2023, Calling for Markets to Turn “Risk-On” Mid-Year
The global economy and markets were rattled by two significant shocks in 2022: an inflation shock and an interest rate shock. Going into 2023, one expected shock remains: recession. Amid this backdrop, BofA Global Research economists and strategists released their outlook for 2023, noting the year should be a story of two halves. The U.S., Euro Area and UK are all expected to see recessions next year, and the rest of the world should continue to weaken, with China a notable exception. The recession shock likely means corporate earnings and economic growth will come under pressure in the first half of the year, while at the same time, China’s reopening offers a reprieve for certain assets.
“This past year has seen significant market volatility due to surging inflation, geopolitical risks, and central banks hiking at paces not seen in decades,” said Candace Browning, head of BofA Global Research. “In 2023, inflation should come down, but it will take time for central banks to declare victory. Next year will continue to present uncertainties in the markets but also opportunities for investors willing to be patient and choose their spots carefully.”
Key macro calls made for the markets and economy in the year ahead are:
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Melissa Anchan, Bank of America