A recap of economic conditions in 2022; looking forward to 2023:
High levels of spending growth in 2021 were supported by high levels of central bank and government COVID-related stimulus. When combined with widespread disruptions in the supply of commodities, goods, and workers, it has led to demand outstripping supply in most economies over the past 18 months.
The resulting high inflation has seen aggressive rises in central bank policy rates over this year – the speed and magnitude of this tightening has been the biggest in the past 40 years.
Our view moving into 2023, is that the main drivers of economic conditions in advanced economies will pivot from one of rising inflation and rising central bank policy rates to a significant slowing of economic activity.
