World – Macro-economic Scenario 2023-2024: a delicate balance
- 06.10.2023
- 33
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- Developed countries – A delicate balance
- Emerging countries – Decent outlook challenged by three headwinds
- Sectors
- Monetary policy – Whatever you do, don't let down your guard
- Interest rates – Downside scenarios: from probable to premature
- Exchange rates – The dollar just keeps on shining
- Economic and financial forecasts
In summary
A tight labour market, eroded but still abundant "over saving", a catch-up in service consumption, these are the key factors that have boosted growth beyond expectations. When paired with overall sound balance sheets in the private sector, they have helped growth stand up far better against the threat posed by surging inflation and aggressive monetary tightening. At a time when monetary tightening is really starting to bite and the support from the post-pandemic recovery is waning, disinflation is allowing us to anticipate a soft landing, rather than a collapse in growth. This assumption is not without risk either, as we have seen with the spike in oil prices since the summer.
Stubborn inflation, resistant growth and resolute monetary tightening have naturally caused bond yields to surge. A scenario where bond yields moderate slightly is taking shape in the US with forecasts for 10Y yields at 4.00% at end-2023 and 3.50% at end-2024. However, this scenario seems premature in the Eurozone, where the ECB has a clearly restrictive policy and may attempt to reduce its balance sheet more quickly. As such, we expect the Bund to be at around 2.60% at end-2023 and 2024. The “USD smile” story just keeps on going. With the US economy holding up, the Fed determined to bring inflation under control, a favourable interest rate differential and episodes of risk aversion, the USD's short-term appeal is undeniable.
Catherine LEBOUGRE, Economiste