The Cambridge Weekly – 11th April 2023

The Cambridge Weekly – 11th April 2023

Spring of hope following winter of doom? 

This year began in anticipation of imminent global recession, but imminent did not mean immediate, and as the second quarter gets under way, the chances of a global recession may be less now than they were. The chart below is Bloomberg’s calculations of the chance of recession occurring within a year, for each region. As it hopefully shows, a combination of events in the first three months has reduced the likelihood of negative real growth occurring in the next 12 months in most regions.

March and Q1 2023 asset class review

The first quarter of 2023 was one to be remembered for the sense of crisis, with markets heading upwards but seemingly towards a cliff edge. As March unfolded, fears grew that the cliff edge had been reached. Fortunately, it appeared that the drop was just a few feet down and the march upwards has continued. For global equity markets, the year began positively after an awful 2022. European natural gas prices continued to decline throughout the quarter, with January alone seeing a 25% fall. Next winter’s gas contracts are now about 30% below the end-2022 price levels.

A brief assessment of the global economy   

The predictions of imminent recession that pervaded economic forecasts last year have so far proved to be somewhat pessimistic. However, economists were generally opining that a stronger than expected 2022 would mean less strength in 2023, so forecasts for the first two quarters of this year were adjusted down.