Morgan Stanley projects that the global economy will grow by 2.2% next year but says that “risks are to the downside” when it comes to such an outlook. For some context, the projection is even lower than the IMF’s latest growth estimate of 2.7%.
The firm says that a resilient job market could allow for the US economy to skirt a recession in 2023, “but the landing doesn’t feel so soft as job growth slows meaningfully and the unemployment rate continues to rise”. Adding that “the cumulative effect of tight policy in 2023 spills over into 2024, resulting in two very weak years”.
As for their overall outlook, they see peak inflation coming in the current quarter “with disinflation driving the narrative next year”. In terms of forecasts, they see US core inflation falling to 2.9% at the end of next year and headline inflation falling to 1.9%.
While they see the US narrowly avoiding a recession, they tip that the UK and Eurozone economies are not likely to be able to escape such a fate.