CHART OF THE DAY
Market Minute: Global economic outlook improves but headwinds remain
Although the global economy is still expected to slow in 2023, the pace will be less gloomy than previously expected
U.S. markets closed the best January in four years — great news from battered stocks, which never saw a Santa Claus rally materialize in 2022. As the U.S. Federal Reserve and some of the other central banks wind down their current hiking cycle, markets are pricing in some optimism. As the recent report by IMF suggests, growth in 2023 will remain weak by historical standards, as the fight against inflation and Russia’s war in Ukraine weigh on activity.
Nevertheless, the economic outlook has turned less dire from the last projection in October — with growth bottoming out and inflation declining. Economic performance in Q3 last year was surprisingly strong, due to a robust job market, strong consumer spending, and business investments. Additionally, the energy crisis in Europe was handled better than expected. Inflation has also improved, declining in most countries, although core inflation has not yet peaked in many countries.
China’s reopening has paved the way for a quick resurgence in activity. The improvement in global financial…