Market Insights - The Investment Outlook for 2023

The Investment Outlook for 2023 report states that 2022 was a difficult year. Widespread vaccination and less lethal strains of COVID-19 led to lower fatality rates, allowing most pandemic-weary populations around the world to move back toward normal activity. However, supply chain disruptions, the lingering effect of fiscal stimulus, and Russia’s invasion of Ukraine caused inflation to surge to its highest level in 40 years. The Federal Reserve (Fed) and other central banks tightened aggressively, triggering sharp sell-offs in both fixed income and equity markets. Mid-term elections resulted in a divided government, and the report suggests little prospect of structural reform to address long-term problems or provide fiscal support should the economy falter. Even as inflation pressures ease at the end of 2022, a recession is widely predicted for 2023.