Market Pulse: February 2023

EX-US GROWTH: We still believe Euro area growth will be weak in 2023 at 0.8%, but we no longer expect a recession, given 1) resilient activity data, 2) a warm winter weighing on natural gas prices, and 3) China’s faster-than-expected reopening. Relatedly, we now expect 2023 China growth at 6.5% (vs. 5.5% previously) as consumption strongly rebounds and mobility data indicate potential for a fast post-exit wave recovery.

US GROWTH: Feel is not always real. Soft data, such as indicators of business and consumer confidence, may reflect broad pessimism, but hard data, such as labor and industrial statistics, remain resilient and inform GIR’s forecast for 1.5% US GDP growth this year. With $1.6tn of excess savings, we believe consumption activity can sustain at current levels, barring a surge in the US unemployment rate to 5%.

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