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Schroders Economics Lens Q3 2023

Three challenges to a soft landing in your chart-pack guide to the global macroeconomic outlook.

20/09/2023
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 chart-pack guide to the global macroeconomic outlook.

It is published quarterly, and illustrates the latest economic forecasts and views from Schroders economics team. The Lens includes analysis of the outlook for growth, inflation, and interest rates, as well as topical issues.

This quarter we look at the three challenges around a soft landing. We highlight the return of real income growth in the US and show the impact of rising oil prices on core US inflation. After slashing our economic growth forecast in China, we show the picture for inflation, the weak real estate data, and flag how global leading indicators point to a better export outlook.

Click here to download your Q3 copy. Schroders Q3 Economic Lens.

Summary:

  • New baseline forecast: global GDP growth slows to 2.5% in 2023 and 2.1% in 2024; small upward revisions for both years.
  • A US recession is no longer anticipated: the US growth forecast was revised-up to 2.3% for 2023 and 1.1% in 2024 (previously 1.5%, with no growth in 2024). China was cut to 4.8% from 6.5% in 2023, with an expansion of 4.5% anticipated in 2024, from 4.3%
  • Read more: Why we’ve slashed our Chinese growth forecast
  • Global inflation is projected to moderate to 4.4% this year and 3.1% in 2024. This hides some marked divergence, with inflation cooling in advanced economies and most emerging markets, but rising in China after a brief period of deflation.
  • Developed market interest rates appear to be peaking, and are projected to fall in 2024; an emerging market easing cycle has now begun.
  • Falling inflation and resilient growth have boosted expectations for a soft landing, though this comes with three challenges:
  • 1) Global growth expectations have ticked up, but the improvement is not universal and is largely confined to the US. The growth outlook for China has deteriorated.
  • 2) Further falls in inflation will be harder to achieve, as these will require a decrease in sticky service sector inflation. This is likely to lead to higher unemployment as companies focus on productivity growth to reduce costs.
  • 3) Monetary policy’s effectiveness in a post-pandemic world has been called into question. We see good reasons why the lags from policy action to changes in the economy have lengthened.

Click here to download your Q3 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.

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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

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