Manulife IM is expecting most advanced economies to slip into recession. “The US will face the lagged impact of the US Federal Reserve’s aggressive tightening. Economic weakness will be particularly pronounced in interest-rate-sensitive economies such as Canada, Australia, New Zealand, and the United Kingdom. In Continental Europe, the growth drag will predominantly stem from particularly large negative terms-of-trade shocks. Meanwhile, slowing final demand from advanced economies, elevated inflation, and a still-strong US dollar are likely to morph into material headwinds for emerging markets,” Manulife IM says.
Since the start of the year, the prognosis has been neutral to negative among market watchers divining the direction of the economy and hence the markets, but some market watchers are wondering if the US Federal Reserve has over-tightened.
The International Monetary Fund is expecting global growth to come in below the 3% threshold it uses to define global recessions. “A downturn of this magnitude — excluding the Covid shock and the global financial crisis — could make 2023 the worst year for global growth since the 1980s,” notes Manulife Investment Management.
