Important points
Half of global fund managers surveyed by Bank of America expect the global economy to weaken over the next 12 months, the bank found in its October 2023 Global Fund Manager Survey. . This is a slight decrease from the 53% who responded similarly in September, but this is partly due to the increased impact. An optimistic view of China's economy. As fears of a recession grow, 30% of fund managers now see the global economy in a “hard landing”, up from 21% in September. At the same time, around 80% of fund managers expect inflation to subside after 2020. Meanwhile, three-quarters expect the yield curve to become even steeper.
Half of global fund managers surveyed by Bank of America expect the global economy to weaken over the next 12 months, the bank found in its October 2023 Global Fund Manager Survey.
50% of fund managers expect global growth to slow, down slightly from 53% who said the same in September, hitting a record high of 70% when they expressed this view last July. . Global growth expectations have been sharply negative since early last year amid the highest inflation in decades and rising interest rates.
The slight improvement in sentiment since last month may be due to increased optimism about China's economic outlook. China's third-quarter gross domestic product (GDP) growth exceeded expectations, giving the world's second-largest economy a much-needed boost after slumping in recent quarters.
The net share of fund managers expecting a strong Chinese economy over the next 12 months rose from 0% in September to 14% in October. Last month's share was the lowest since it fell into negative territory early last year, when the continued strict lockdown due to the coronavirus pandemic weighed on China's economy.
Forty-four percent of fund managers expect the global economic slowdown to be severe enough to cause a recession in the first half of 2024, compared with 36% in September. Only 5% of respondents expect a recession to begin by the end of this year, and 25% say there is no chance of a recession occurring within the next 18 months.
As fears of a recession grow, 30% of fund managers predict a “hard landing” for the global economy, up from just 21% in September. At the same time, the proportion expecting a “soft landing” – a scenario in which the world's central banks can curb inflation through higher interest rates without triggering a recession – fell 10 percentage points from September to 64%.
On a positive note, around 80% of fund managers expect inflation to subside over the next 12 months, while three-quarters expect the yield curve to steepen. The latter is a positive sign for economic growth, as rising long-term government bond yields indicate rising expectations for future growth.
