EME Macro/Strategy: macro projections – global backdrop assumptions, 2023-24E

This chartbook contains our latest macro projections for 2023/2024E and the most important charts on business and consumer confidence, labour market developments, balance of payments and fiscal execution.
A smooth energy supply backdrop and an early rebound in business and consumer confidence have led us to upgrade our 2023E Eurozone GDP outlook to 0.4%, compared with a 1.2% contraction in our previous forecasts. We maintain the view that inflation has peaked and will decelerate briskly this year. The flash readings released so far, for February, may appear at odds with this view, but the data so far, in reality, only show that food inflation remains high and it is on the cusp of slowing down, which is in line with our assumptions. We maintain the view that the ECB will take the refi rate to 4.00% this year, which moderates, but does not impair the recovery, thanks to healthy private sector balance sheets and strong overall policy support towards investment. In the case of the US, we have upgraded our GDP estimate to 0.8% this year, but we highlight that, in terms of savings and the health of private sector balance sheets, the US is more frail than the Eurozone currently, and the Fed will need to pivot next year, to avoid triggering a severe recession that would spill over into the housing market.