IN FOCUS6-8 min read

Schroders Economics Lens Q2 2023

Your new chart-pack guide to the global macroeconomic outlook.

21/06/2023
Economics lens

Authors

Keith Wade
Chief Economist & Strategist
Azad Zangana
Senior European Economist and Strategist
David Rees
Senior Emerging Markets Economist
George Brown
Senior US Economist

Schroders Economics Lens is a new chart-pack guide to the global macroeconomic outlook.

It will be published quarterly, and illustrates the latest economic forecasts and views from Schroders economics team. It includes analysis of the outlook for growth, inflation, and interest rates, as well as topical issues such as banking vulnerabilities and UK housing.

Click here to download your Q2 copy.

Summary:

- The impact of higher interest rates is starting to be felt. Manufacturing activity is trending down, especially in Europe and Asia. Services continue to rebound, as households rebalance spending patterns to pre-pandemic norms.

- New baseline forecast: global GDP growth slows to 2.4% this year and 1.9% in 2024, an upward revision for this year, mostly driven by upgrades to the US forecast, but a downgrade to next year.

- Headline inflation is falling as food and oil prices weaken and goods prices ease. But core inflation is high and sticky, and will remain so until labour markets loosen significantly.

- Interest rates are near the peak in the US, but there is further to go in the UK and the Eurozone.

- A mild recession is forecast for the US in Q4 2023 (a quarter later than previously), 0% growth in 2024. Rate cuts are projected to start in Q4 and continue next year. The 2024 year-end Fed funds rate forecast is 3.5%

- The UK is forecast to avoid recession but stagnate for most of 2023, and inflation to stay high. The bank rate is expected to get to 5%, but be cut to 3.25% by the end of 2024. Europe is performing better than expected, but inflation has been coming in higher. The European Central Bank is projected to hike to 4.25%, but cut to 2.5% by the end of 2024.

- China has started the year well but other emerging markets are weakening as higher rates bite.

- Banking failures and higher rates have contributed to sharply tighter lending standards and slowing lending growth in the US. But we do not see a systemic risk in the banking sector.

Click here to download your Q2 copy.

The latest Economic and Strategy Viewpoint, which includes a more detailed discussion of our latest economic views, forecasts, and scenario analysis, is available in full here.

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. The content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

Authors

Keith Wade
Chief Economist & Strategist
Azad Zangana
Senior European Economist and Strategist
David Rees
Senior Emerging Markets Economist
George Brown
Senior US Economist

Topics

Follow us

To facilitate legibility, the language forms male, female and diverse (m/f/d) are not used simultaneously in this text. All references to persons apply equally to all genders.

Schroder Investment Management (Switzerland) AG (herein after called "SIMSAG") webpages are aimed exclusively at qualified investors with their registered office or residence in Switzerland. The SIMSAG webpage also contains information about collective investment schemes which are not approved for distribution to non-qualified investors in Switzerland.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security / sector / country.