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Experts fear the tough first half of 2023 for the stock market

High inflation and geopolitical tensions continue to be the biggest risks for the world economy. This is what analysts of the French investment group Amundi expect according to their prediction for 2023.

"During next year, investors can expect a slowdown in economic growth and persistent inflation. In Europe, in addition, the energy crisis and the inflation tension caused by

the covid pandemic may lead to a recession", believe the analysts of the Amundi group.

Even the United States will probably not avoid a mild recession, but the end of 2023 could bring more positive news. As the latest survey made by the Bank of America among investment fund managers, more than 90% of them believe that inflation will slow down significantly. A slowdown in price growth would then likely prompt the Fed

to gradually cut interest rates in order to restart economic growth.

According to Amundi, the situation in the USA and Europe will have an impact on

the global GDP, which is expected to grow just by 2.2% in 2023 (compared to 3.4%

in 2022). While the combination of slow growth and fading inflation will spill over into markets in developing countries, China could be spared from this scenario.

A prerequisite for this is the revival of the economy after the end of the coronavirus measures, and the stabilization of the local real estate market.

The experts of the Amundi Group also focus on the Czech Republic in their prediction for this year. They expect a decrease of the local inflation rate but expect it to fall below 10 percent only in the second half of the year. The decisive factor of the persistent rise of price level is the projection of higher input prices into secondary products.

A high rate of inflation accompanied by falling consumption and lower industrial activity may lead to the plunge of the domestic economy into recession in the first quarters

of 2023. As a result, the Czech National Bank can start reducing interest rates later in 2023, as well as limit interventions on the foreign exchange market, allowing the Czech crown to get weaker.

The respondents of the aforementioned Bank of America survey as well as of a similar survey made by Bloomberg, further expect that the first half of 2022 will be very rough for stock markets. The total value of reported corporate earnings will fall, and the price of shares will follow. Therefore, from this year's perspective, investors and fund managers consider government bonds to be a better performing and safer asset.


Seznam Zprávy (3.1.2023)


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