World map vector with an light-red background

Our analysts’ expectations for 2023

Mild economic downturns in the U.S. and the Euro Area:
The Consensus among the institutions we poll is for both the U.S. and Euro area to contract ahead in sequential terms, in Q1-Q2 2023 and Q4 22-Q1 2023 respectively. However, in both instances the declines are forecast to be mild, given strong labor markets and signs that inflation is now dropping—the latter will ease the burden on consumers and reduce the need for aggressive monetary tightening.

GDP growth for Euro Area and the United states for 2023

Accelerating momentum in China, although near-term outlook is choppy:
China’s rapid rollback of Covid-19 restrictions in recent weeks bodes well for economic activity in H2 2023. However, momentum in Q1 is likely to be constrained by a surge in infections provoking caution among consumers and worker absenteeism. Beijing streets were reportedly largely empty in mid-December for instance as people fell ill and sought refuge from the virus. If deaths rise rapidly, there is also the possibility of a snap-back of some restrictions, which would harm economic activity. The Consensus among our analysts is for annual GDP growth to accelerate from 3.0% in Q1 2023 to 4.8% by Q4 2023.

Oil prices to average above USD 90 per barrel:
An expected recovery in China and tighter oil supply as Russian supply is squeezed from the market are expected to push Brent crude oil prices to average around USD 93 per barrel next year, up from their current level of slightly above USD 80 per barrel. This bodes well for oil-exporting economies, but will contribute to relatively high global inflation by historical standards. OPEC’s production decisions, a possible revamped Iranian nuclear deal, instability in important oil exporters Iraq and Libya, and U.S. sanctions on Venezuelan oil supply will be important to watch.

U.S. dollar to remain close to current level:
After a relentless upward march until late September, the U.S. dollar has since depreciated notably against other currencies as lower-than-expected U.S. inflation drove market hopes of less aggressive Federal Reserve tightening going forward. For instance, the USD went from below parity with the euro to an exchange rate of USD 1.06 per EUR by mid-December. Our analysts see the USD ending next year close to its current level. Geopolitical tensions and the pace of Fed hikes relative to those of other central banks will have a key bearing on the dollar next year.

Insights from Our Analyst Network

On China, analysts at Nomura said:

“We reckon that the incoming migration around the Chinese New Year holiday in late January could bring about an unprecedented spread of Covid and severe disruptions to the economy. Despite the substantial resources devoted to the heavy-handed zero Covid policy over the past two years, China does not appear to be well prepared for a massive wave of Covid infections, and it may have to pay a high price for its procrastination on embracing a ‘living with Covid’ approach. In our view, ending zero Covid is both necessary and inevitable; it is the precondition for a growth recovery in 2023, and we raised our growth forecast for 2023 to 4.8% from 4.0% a week ago on the sudden and dramatic shift. However, we continue to caution that the road to a full reopening may still be painful and bumpy.”

Regarding recession in the West, ING’s Carsten Brzeski said:

“We should get a rather textbook-style recession in the US with the central bank hiking rates until the real estate and labour markets start to weaken, inflation comes down, and the Fed can actually cut policy rates again. […] look forward to an end to the typical cycle in the eurozone, where a mild recession will be followed by only very subdued growth, with a risk of a ‘double dip’, as the region has to shoulder many structural challenges and transitions.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.

Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest