Global Markets Overview: November 2022

Our latest economic outlook is characterised by higher than normal uncertainty and high regional differences:

• We expect material slowdowns in GDP growth in the US and Europe in 2023. This is, in part, driven by the aggressive increase in policy rates that we have seen over 2022 and concerns over energy supply in Europe.
• Central banks in the major western economies have continued to increase policy rates at a fast pace in the second half of 2022; we expect them to increase policy rates further over the next four months, but at a slower pace.
• Unemployment rates are very low in the US and Europe and wage pressures either remain high or are rising. This leads to the risk of wage growth and core inflation becoming more entrenched in 2023 than expected. Ultimately, this would likely require even more monetary tightening to bring down inflation, which would increase the likelihood of a deeper and longer economic contraction.

Therefore, as we move towards these late-cycle dynamics in 2023, there is a wider than normal range of possible economic outcomes in western advanced economies.