Insights

No single catch-phrase epitomises the 2023 global macro outlook, but here are ten predictions for the year ahead.

On balance, we are constructive mainly for valuation support and growth prospects improving for China with a firm tailwind from an easing dollar. Pockets of the US equity market may struggle on weaker earnings, but the rest of the world should still fair relatively well provided the US does not enter a deep recession.

We expect a moderation of growth, a peak in inflation and a more accommodative monetary policy in 2023. We see this as a positive for Singapore, as we believe a more accommodative policy backdrop will help support continued expansion in corporate earnings growth in 2023.

Labour shortages and inflation are expected to pressure the New Zealand economy in 2023. That said, New Zealand’s listed market is more defensive than the broader economy with large weights in defensive sectors such as utilities and telecommunications.

We believe that the rewards will outweigh the risks related to China amid an existence of enough cyclical, thematic and structural trends that could enable the country to outperform in 2023; particular focus will be on the government’s zero-COVID policy and its support for the property sector.

Most Asian countries are expected to grow at a slower pace in 2023 than they did in 2022, and fiscal stimulus will no longer be a dominant factor driving growth in the region. We expect monetary policy outlook to persist as the primary driver of rates in 2023 with focus on the potential end to the tightening cycle.

We believe that the benign macro backdrop should remain supportive for credit fundamentals in 2023. The fiscal deficits of Asian economies are expected to gradually narrow as the need for pandemic support decreases.

We present our 2023 outlook for core markets, emerging markets and global credit.

Rather surprisingly, a UK tabloid newspaper recently contacted the author following the seemingly spectacular “blow up” in the UK bond markets, and the subsequent “crises” within the pension / insurance sectors. The journalist clearly wanted to write a story about reckless spendthrift government fiscal policies, and miss-management by pension fund managers. However, this was not the story that they got from the interview.

The just-released 3Q CY22 data on aggregate corporate profits in Japan was very positive, with the overall corporate recurring pre-tax profit margin hitting a record high on a four quarter average.