Economics and markets

Vanguard economic and market outlook for 2023: Global summary

November 17, 2022

The global economy in 2023: Beating back inflation
Global inflation: Persistently surprising
A recession by any other name
Vanguard’s economic forecasts
The difference in GDP growth forecasts for 2023 between Vanguard and the consensus are: for the U.S., 0.25%–0.5% versus 0.9%; for the Euro area, 0% versus 0.2%; for the U.K., –1% to –1.5% versus –0.5%; and for China, 4.5% versus 5%. The trend GDP growth rate is 1.8% for the U.S., 1.2% for the Euro area, 1.7% for the U.K., and 4.3% for China.  The difference in unemployment rate forecasts for 2023 between Vanguard and the consensus are: for the U.S., 4.4% for both; for the Euro area, 7.4% versus 7.1%; for the U.K., 7% versus 4.7%; and for China, 4.7% from Vanguard with no consensus forecast available. The NAIRU rate is 3.5%–4% for the U.S., 6.5%–7% for the Euro area, 3.5%–4% for the U.K., and 5% for China.  The difference in headline inflation rate forecasts for 2023 between Vanguard and the consensus are: for the U.S., 3% versus 2.4%; for the Euro area, 5.3% versus 5.2%; for the U.K., 6.3% versus 6.5%; and for China, 2.2% versus 2.3%.   Vanguard's monetary policy rate forecasts for the U.S. are 4.25% at the end of 2022 and 4.5% at the end of 2023. The neutral rate forecast for the U.S. is 2.5%.  Vanguard’s monetary policy rate forecasts for the Euro area are 1.75%–2% at the end of 2022 and 2.5% at the end of 2023. The neutral rate forecast for the Euro area is 1.5%.  Vanguard's monetary policy rate forecasts for the U.K. are 3.5% at the end of 2022 and 4.5% at the end of 2023. The neutral rate forecast for the U.K. is 2.5%.  Vanguard's monetary policy rate forecasts for China are 2.65% at the end of 2022 and 2.6% at the end of 2023. The neutral rate forecast for China is 4.5%–5%.
Global fixed income: Brighter days ahead
Global equities: Resetting expectations
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