Factbox: Global banks see global economy slowing further in 2023, with US recession likely

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Nov 21 (Reuters) – The world’s biggest investment banks expect global economic growth to slow further in 2023 after a year troubled by war and runaway inflation that triggered one of the tightening cycles fastest currency in recent times.

The US Federal Reserve has raised interest rates by 375 basis points this year since initiating its first hike in March. This has raised concerns of a recession, even as the central bank is expected to temper its pace of hike.

Real GDP forecast (annual Y/Y) for 2023:

US inflation forecast for 2023 and Fed terminal rate forecast:

Morgan Stanley sees the Fed making its first rate cut by December 2023, taking the benchmark rate to 4.375% by the end of this year. Barclays sees the rate between 4.25% and 4.5% by the end of next year, following a rate cut.

UBS expects US inflation to be “close enough” to the Fed’s 2% target by the end of 2023 for the central bank to consider rate cuts.

Forecasts for currency pairs, 10-year US Treasury yields, S&P 500 target by the end of 2023:

UBS sees the euro falling below parity with the dollar by March 2023 before recovering by September.

At 1:46 p.m. GMT on November 21, 2022:

EUR/USD: 1.02

USD/CNY: 7.16

USD/JPY: 141.72

S&P 500 level (as of Friday’s close): 3,965.34

Reporting by Susan Mathew in Bengaluru; Editing by Sriraj Kalluvila

Our standards: The Thomson Reuters Trust Principles.

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