Q4 2023 Economic Commentary

The Pivot

2023 was an extraordinary year in so many ways with markets responding to a banking crisis in Europe and US, increased geopolitical tensions, rising interest rates, and a surge in optimism around the potential in artificial intelligence.

As we entered 2023 there was a consensus view amongst economists and strategists that the global economy would enter a recession during the year. As inflation spiked and stayed high, central banks increased rates sharply and a recession appeared almost certain.  The reality proved less downbeat than these projections.

So far, the predictions of a recession have been misplaced as economies have seemingly coped well in the higher rate environment. This has been replaced by investor belief in a “soft landing” of the economy, where inflation continues to decline, unemployment remains low and GDP growth remains positive.