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Economic and Market Outlook for 2023

Two young women, one wearing a face mask, sit on the top step outside a closed store at night. The storefront is covered in colorful neon signs, which glow in the darkness.

Economies have overheated and have begun slowing down, with some potentially in recession already. Are we there yet? Will monetary tightening lead to a deep recession?

In this episode of the Critical Thinking, Critical Issues podcast, Mercer colleagues explore the macroeconomy, the risk of recession, and the markets — where to invest both in the public and private asset space as we look ahead to next year.

On China’s economy:

The silver lining to the lockdowns in China has been that it reduced commodity demand. … The lack of domestic demand has reduced some of the commodity demand, which has eased inflationary pressures. If China does do a full reopening, a potential risk is that it starts to drive commodity prices higher again.

There is a [possibility] that commodity prices pick up in the second half of next year, and then the Fed … has to re-hike. 

On global equities and credit assets:

The best we can look forward to is a stabilization of growth at a low-ish level, inflation coming down, and the Fed no longer hiking rates, and perhaps [in] two years, possibly cutting rates. 

Credit assets generally are looking more attractive, because for the first ime in 15 years or so, you can get a return on bonds. 

On where investors should be focusing:

Follow labor market data. … The labor market is going to give us the answer to the critical question of next year, which is how far and how fast does inflation fall, and what [do] the Fed and central banks do about it?

Samantha Davidson

US OCIO Leader at Mercer

Samantha oversees Mercer’s OCIO business and team in the U.S. and is responsible for implementing strategic initiatives, driving business development and managing and expanding client relationships.

Rupert Watson

Head of Asset Allocation, International Ex-Pacific at Mercer

Rupert is head of asset allocation at Mercer. In this role, he is responsible for all the tactical positions taken within funds in Europe. He is also a passionate supporter of equality and involved in D&I activities inside and outside Mercer. Rupert helped set up All of Us (, a social media platform for companies to manage their D&I and wellbeing activities in one place and connect within and across companies.

Anthony Brown

Director of Capital Markets, US at Mercer

Anthony Brown is the director of Capital Markets in the US at Mercer.

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