Just how likely is a recession?
24 May 2023
It is looking more likely than not, explains Ed Tomlinson.
As we draw closer to the end of the financial year, talk of economic recession – a dominant theme of 2023 – is continuing.
The anxiety we’ve seen in investment markets this year has not abated. Investors remain uncertain about the strength and resilience of the global economy against a number of negative forces.
The most dominant of these forces is inflation. And despite all that central banks and governments have done in the past year, it’s proving very difficult to control. This means they may have to do even more, which will increase pressure on the economy, making recession more likely (but not inevitable).
While risk of recession will be different depending on geographical region (more so in the US and less so here), and the duration of recession may be short, uncertainty among investors is likely to continue.
Investment performance is holding up, so far
Against this backdrop, investment markets are holding up quite well. We recorded strong returns for the first quarter of 2023 across almost all smartMonday investment options, despite what was a turbulent three months globally. The graph of the Australian sharemarket performance below shows you what that turbulence looks like.