The Blubber

Per Economic Times

Citigroup economists were once 50-50 about a worldwide recession in 2023, but now, they have decided to drop their estimates down to 30%. This comes as different macroeconomic factors have changed, and the global economy is improving in certain areas.

The estimations by Citigroup come despite a WSJ report finding 61% of economists thinking that a recession is possible for the US in the next 12 months. The survey also highlighted how GDP is also expected to stagnate in 2023.

Although Citigroup maintains slightly more positive about a worldwide recession not happening, US banks are doing otherwise and are now forecasting either a recession or a potentially significant slowdown. In Q4 of 2022, global investment banking revenue dropped by $15.3 billion, a 50% drop YOY.

The more positive look by Citigroup economists comes shortly after China abandoned its zero-Covid policy while the gas shock from the tension between Russia and Ukraine has started to soften.

The news comes shortly after the annual World Economic Forum started in Davos, with economists and executives discussing what would happen to the global economy. Bob Moritz, PWC global chairman, gave a statement addressing the geopolitical threat, per Bloomberg.

Moritz: “If Russia-Ukraine can happen, what else?... What about the Middle East and the role of Iran? Even the Inflation Reduction Act in the US is a potential risk.”

Compared to the financial crisis of 2008, several bosses are now more fearful of the economy. However, they still shared confidence in their companies, highlighting how they will navigate "through this downturn."

Moritz also highlighted how change was very important. The meeting also resulted in 40% of executives believing that they will not be economically viable if they cannot transform in the next decade.

Moritz: “The short term is about how to manage cost pressures and the longer term is about supply chains, climate, technological disruption.”

See flow at unusualwhales.com/flow.

Other News:

• 61% of Economists Think Recession is Possible in the Next 12 Months: GDP Expected to Stagnate in 2023
• U.S. banks get ready for a recession

Resources:

Economic Times

Bloomberg