Amundi: Opportunities beyond a precarious growth path

June 23, 2023

Despite a more resilient start of the year, Amundi sees a further deceleration in growth in the second half (H2) of 2023, with divergence across regions.

They forecast 2023 global GDP growth at 2.9%, with the Emerging Markets and the Developed Markets growth gap remaining wide, at 3.3% (although it is not increasing). They expect growth in developed markets to slow to 0.9% while emerging market GDP expansion should pick up to 4.2%. For 2024, Amundi forecasts global, Developed Markets, and Emerging Markets real GDP growth at 2.5%, 0.5%, and 3.8%, and respectively.

Key points of the outlook

• Narrow and uncertain path to growth: global growth to further decelerate and bottom out in H2 2023, progressive recovery becoming more likely in H1 2024.
• Slowdown in inflation will be gradual, mainly in the core inflation. Inflation will trend lower but should remain above central banks’ targets until mid-2024. There is a limited risk of reacceleration as monetary policies should remain restrictive for an extended period.
• Quality will prevail: investors to enter H2 with caution and focus on quality across the board. Moving into 2024, outlook for earnings improvement reveals opportunities to add risk assets.
• Emerging markets from West to East: play Emerging Market growth advantage in equity and bonds to enhance diversification and foster medium-term return potential, with focus on Asia.

Vincent Mortier, Group CIO of Amundi, said:

'Amid low visibility on the economic outlook, quality -- both for equity and bonds -- is the compass with which to navigate this uncertain phase. An end to Fed tightening and a possible US dollar depreciation bode well for Emerging Market assets as we enter the second half of the year.' 

Monica Defend, Head of Amundi Institute added:

'A central bank pause supports the case for bonds. Investors will have to assess the inflation path and earnings outlook moving into 2024 to identify opportunities in equities. Investors should also explore divergences across markets and regions.'