According to Keith Wade, chief economist and strategist at Schroders, 2023 is a turning point and the weakest year for financial services. 

“There will be a recession in the US and Europe, with a hard landing. But emerging markets are expected to do better, driven by China,” he said. “China’s GDP growth is set to grow by 5 per cent, compared to 3 per this year.” 

“We believe that inflation has peaked in the US, partly due to the fall back in energy prices and a slowdown in the housing market, and it will peak in the next months in the UK too,” he said. “Although sticky inflation takes longer to come down, we believe core inflation will fall. The Fed will increase interest rates next week and in January but there will be an easing in 2024.”   

“Although we are expecting inflation to fall next year, we will still be in a higher inflationary environment in the years to come, and bonds offer quite a lot of value now,” he continued.

“We have upgraded our view on fixed income markets. We are still cautious on equities in 2023, but we expect to be more positive as we enter 2023,” Wade said.