Economics and markets

2023 economy and markets: 4 things to know

December 05, 2022

A line graph shows the historical policy rates of central banks in the United Kingdom, Australia, and the United States since 1994, the policy rate in Europe since1998, and the policy rate in Japan since 2008. The graph also shows, for all five countries and regions, forecasts of policy rates through 2025. Volatile across most periods, rates generally collapsed in 2008 and hovered near zero for a decade or more. Australia proved an outlier, with its policy rate rising in 2009 and 2010 before declining. Rates everywhere were near zero in 2020 and 2021. The forecasts show rates in 2022 climbing toward 4 percent or more in the United Kingdom, Australia, and the United States before easing a bit in 2023 and 2024. The European policy rate is expected to rise to and level off at about 2 percent, while the rate in Japan is expected to rise only fractionally above zero.
Stacked bar charts show how Europe might replace in 2022 the roughly 175 billion cubic meters of Russian gas it imported in 2021. Additional supplies from outside Russia, the substitution of other fuels, including renewables, and a drawdown in stored gas each contribute but all three measures combine to leave a required 15 percent decline in gas consumption relative to 2021. The charts show gas supplies from outside Russia totaling about 225 billion cubic meters in 2021.
A mountain graph shows supply and demand for housing units in China since 1996. In the late 1990s, supply and demand were both low—well below one million units per year—but supply in excess of demand was already growing. Around the turn of the century the excess of supply over demand started to widen, and the gap grew more or less steadily for about a decade. Between about 2010 and 2014 the gap widened more quickly, reaching a ratio of roughly 5 million units of supply but less than 2 million units of demand. That ratio persisted, largely unchanged, between roughly 2014 and late 2022.
A line graph shows year-over-year changes in both the working-age population and the demand for real estate in China from 2007 through late 2022. It also shows forecasts for the next five years. Demand for real estate has been volatile, ranging from about negative 40 percent on a year-over-year basis to positive 100 percent. Growth in the working-age population peaked at about 1.5 percent around 2009, and the working-age population has been in decline since about 2010. In late 2022, the population was shrinking at a rate of about 1 percent, and the demand for real estate was falling at a rate of about 20 percent. Demand is expected to grow over the next couple years before shrinking again around 2026 and 2027. The working-age population is forecast to continue declining, at a rate of 1 to 2 percent.
A graph shows the declining value in 2022 of a hypothetical $100 investment in a portfolio tracking the broad U.S. market of investment-grade bonds. The investment’s value fell nearly 20 percent, to about $80, in late 2022. The graph also shows our 10-year forecasts for the value of such a portfolio as of both December 31, 2021, and September 30, 2022, as well as ranges of possible outcomes around our estimates. Our forecast from year-end 2021 was for the portfolio to rise in value slowly, growing to reach about $120 after a decade. Our forecast as of September 30, 2022, is for the portfolio to rebound from about $80 to roughly $130 in a decade.


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