The year 2023 announces a paradigm shift from an economic point of view, according to the forecasts of BlackRock experts and its vice-president Philipp Hildebrand. According to them, the uncertain geopolitical situation combined with the rise in inflation portends the beginning of a new international economic era.
BlackRock foresees a bleak future
Philipp Hildebrand, the vice president of the giant BlackRocksurrounded by a team of senior company executives, warned of the arrival of a new economic era and a total paradigm shift.
“The Great Moderation, the period of four decades of largely stable activity and inflation, is behind us. The new regime of greater macroeconomic and market volatility is taking hold. A recession is announced. »
The Great Moderation is the period from the 1980s until the financial crisis of 2008, period during which macroeconomic volatility was at its lowest and where all the various important factors such as unemployment, economic growth or inflation have been able to observe a continuous stable level.
Also, as Philipp Hildebrand points out, since 2008, these macroeconomic factors have become unpredictable and inflation can no longer be concealed. Various events, including the war between Russia and Ukraine, only encourage division internationally.
We were able to verify this with the eviction of Russian banks from the international SWIFT networkthus encouraging Moscow to turn to its Chinese counterparts, among others.
“This is, in our view, the most tense global environment since World War II. We see geopolitical cooperation and globalization evolving into a fragmented world with competing blocs. This is done at the expense of economic efficiency. »
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Overall economic growth slowed down
According to BlackRock forecasts, inflation will necessarily be kept above the level targeted by central banks due to the following 3 factors:
Population agingwhich will combine the cumulative decrease in the available workforce with an increase in costs relating to the loss of autonomy of the elderly;
Geopolitical tensionsas we said earlier, which have already begun to disrupt stable global supply chains;
A transition to clean energy which will lead de facto a rise in inflation if it does not occur over the long term.
Additionally, according to the asset management giant, the United States Federal Reserve (FED) will not be able, this time, to block the rise in inflation by simply reducing interest rates as it has been able to do so far.
“Central bankers will not step in to the rescue when growth slows under this new regime, contrary to what investors have come to expect. That’s why the old playbook of just “buying the dip” doesn’t apply in this diet. »
In addition, various signs such as the slowdown in the real estate market (and the overall rise in housing prices), the drop in household savings or even a drop in investment by business leaders, are, according to the BlackRock teams, warning signs of economic collapse to come as early as next year.
Wall Street Banks are no more confident: be it Morgan Stanley, Bank of America or even Deutsche Bank, these pillars of the international economy predict a drop in US equities of around 20% for the course of 2023. According to David Solomon, the CEO of Goldman Sachs, there would be only a 35% chance that the recession will be avoided by the American economy next year.
And as far as France is concerned, the recession is already here : according to the available data, the French GDP should fall not only for this last quarter of 2022, but also for the first quarter of 2023. According to the forecasts, unemployment should reach 8%, and public deficits as well as public debts should also explode.
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Published by Editions Larousse
Sources: Fortune, Capital
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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