Financial forecast for 2023
Well its almost Christmas, so as we get ready to pull our chairs around the table and enjoy a Christmas roast, we might as well prepare for the inevitable conversation. How will the markets perform next year.
Overall the economy is expected to continue its strong growth. The unemployment rate is expected to remain low but slowly rise to counter inflation. Wages are expected to continue to rise (causing inflation) until the unemployment rate exceed NAIRU (about 5%) The stock market is expected to continue to be strong, and the housing market is expected to continue to rebound. Consumer confidence is expected to recover, and inflation is expected to gradually fall.
Oil and energy
The main impact on the economy this year has been the spike in oil prices. Thanks to a troublesome dust-up in Eastern Europe, oil has not been greesing the economic wheels for some time causing friction in markets like food delivery, shipping and heavy industry. While some might be releived that higher oil prices help stave off global warming, its done nothing to help with the weekly shop. If things can just settle down over there, then we should see inflation vanish, interest rates drop, house prices and the stock market soar.
The interest rates have already climed quite far in 2022, so the FED expect to see them cooling off by the end of next year. Once this happens, house prices will continue to rise particularly in cities. The further we get past sneezing the more likely people are to want to move to the heart of the city.
The Chinese economy has been beset by lockdowns during 2022 but there are signs that they are moving past this into an endemic stage. Once this happens, we can see supply channels filling up again and the Chinese economy seeing a resurgence. This is of course provided there is no troubles in Taiwan, but hopefully after seeing the mess in Europe, China will decide to skip causing waves this year.
The British economy seems to have dug itself out of trouble with the pound rising 5% over the past few weeks. This has largely been due to efforts to reduce spending and increace tax inflows which generally lowers debt. The downside is that these efforts hurt growth and international competitiveness, but establishing a stronger economic footing seems to be the priority now. See our forecast for Barclays
After the lockdowns ended, more money is returning to the high-street, which means less money online. Many of the big-name tech companies have been freezing new-hires to keep costs down and its widely expected that revenues will have trouble growing in 2023. New technologies like AI are making major in-roads into established industries, so market disruption is very likely. See our forecasts for Google and Apple
The health market is expected to grow in 2023. As elective surguries return and people move on from just worrying about bugs in the air, hospitals are doing well. New technologies in drug manufacturing has opened the door to new therapies which have been fast-tracked due to the pandemic. We can expect to see AI driven health solutions, transfer RNA and other technologies creating new markets in health. See our forecasts for United Health and HCSC
Overall we anticipate strong growth in 2023 with markets rising 5-10% outpacing inflation. However, geopolitical events could easily impact this forecast particularly if China becomes involved.