Global Macro Outlook - First Quarter 2023

What You Need to Know

After a year defined by inflation and the policy response to it, we expect 2023 to be a year of transition. The timing of that transition, however, remains unclear and is likely to be defined by the amount of damage done to the economy by this tightening cycle.


Key Forecast Trends

  • Manufacturing surveys make clear that supply chain disruptions are largely behind us, and producer inventories have normalized. We’re now confident that goods prices will continue to contribute to disinflation in the coming months.
  • Housing-related inflation hasn’t likely peaked, but we expect that it will in the next few quarters.
  • Central banks are likely to stop raising rates, but they’re also likely to leave them at restrictive levels until the labor market weakens meaningfully.
  • Our forecasts for major global economies incorporate a fairly mild recession, characterized by GDP growth close to zero in the US and slightly below that in the UK and euro area.

The Global Cycle for 1Q:2023