Predictions for 2023 – How Did They Stand Up?

<p>Looking back on predictions can be a painful exercise – after all, hindsight is 20/20. But it can also be useful to consider why some forecasts were more accurate than others as they may provide a pointer to what might happen over the next 12 months.</p><p>Talk of Recession</p><p>With that in mind, we start by looking at the global economic forecasts for this year. In mid-December 2022, BofA Global Research economists and strategists <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2022/12/bofa-global-research-offers-economic-and-market-outlook-for-2023.html" target="_blank" rel="nofollow">suggested that the US, eurozone and UK would all see recessions</a>.
</p><p>This prediction very nearly came to pass in the UK, where the economy flatlined but stayed just on the right side of downturn thanks to higher business investment in the first half of the year, while the picture was less clear in the eurozone where the economy contracted for two consecutive quarters but the broader measurement (that includes unemployment figures) meant it was only a ‘technical’ recession.</p><p>Better than expected employment data also meant the widely predicted US recession did not come to pass, with economic growth defying expectations.</p><p>Problems for Banks</p><p>Gloomy predictions for the banking sector proved more prescient. The Economist Intelligence Unit warned that<a href="https://www.eiu.com/n/global-themes/rising-interest-rates/#:~:text=Weakening%20economic%20output%2C%20rising%20interest,likely%20to%20be%20even%20tougher." target="_blank" rel="nofollow"> rising interest rates and international political tensions would worsen conditions for banks in 2023</a> and within the first quarter a number of banks had fallen, albeit for a variety of reasons.</p><blockquote><p lang="en" dir="ltr">