Economic Update December 2022
Summary
Taming inflation
Advanced economies are navigating the dual challenge of high inflation and a weakening growth outlook. High rates of inflation have caused central banks to raise interest rates exceptionally quickly and, in most cases, tightening will likely continue based on near term data, suggesting downside risks to economic growth in 2023. This is the cost of central banks trying to drag inflation meaningfully lower.
The inflation outlook is critical and will define just how much economic pain central banks will have to risk before they potentially pivot. While there is emerging evidence that the peak in inflation is behind us, the speed at which it decelerates will be a key signpost for investors.
Looking forward to the coming year, we expect markets to remain sensitive to these inflation and monetary policy considerations. However, in the near term we view further significant selloffs as unlikely and are looking for some modest upside as pressures recede in global markets, with better-than-expected economic data and peaking inflation exerting less pressure on central banks.
About the author
Chief Economist
Alex Joiner, PhD
Joined in 2016
Alex Joiner is Chief Economist at IFM Investors. He is responsible for the firm’s economic, financial market and geopolitical risk analysis that is key in IFM’s investment process. In this capacity he engages with IFM’s domestic and global clients on macro-investment trends and themes. He is a frequent commentator on economic and markets via traditional and social media and regularly speaks at public forums and conferences. He has over two decades of professional experience in economic and markets and prior to joining IFM was the Chief Economist at Bank of America Merrill Lynch (Australian & New Zealand) after being a senior economist at ANZ Bank. He holds a First Class honours degree in Economics and a PhD in Econometrics from Monash University. Alex is also committee member of the Australian Business Economists.
About the author
Economist
Frans van den Bogaerde, CFA
Joined in 2019
Frans supports the Chief Economist with the firm’s economic, financial market, and policy analysis and forecasting. He holds a Bachelor of Commerce (Finance & Economics) with Honours in Finance (First Class) from the University of Melbourne. Prior to joining IFM Investors Frans was undertaking his Honours degree and was a researcher with the Brain Mind and Markets Lab at the University of Melbourne.
About the author
Economist
Lea Jurkovic
Joined in 2022
Lea supports the Chief Economist with the firm’s economic, financial market, and policy analysis and forecasting. She holds a Bachelor of Arts (Japanese studies) and Bachelor of Economics (Economics and Econometrics) with Honours in Economics (First Class) from the University of Sydney. Prior to joining IFM Investors Lea was an economist at the Reserve Bank of Australia with experience in domestic markets and Asian & International economics.