The good news at the start of 2023 quickly gave way to hints that the end of the year would be far less promising.Over and above the risks that have already been mentioned many times, some of which continue to intensify (financial stability, social and political risks), we should bear in mind that the fight against inflation has not yet been won: excluding energy, inflation remains well above the targets set by central banks, while the situation on the oil market has (again) became tense following the attacks in Israel. All the leading indicators point to a sharp slowdown in activity in North America and the Eurozone towards the end of the year, and the recovery of the Chinese economy has rapidly collided with structural weaknesses and a lack of confidence among households and businesses. In this context, we have modified 7 country risk assessments (2 upgrades and 5 downgrades) and 33 sector risk assessments (17 upgrades and 16 downgrades), reflecting a degree of stability in our expectations over the next 18 months, in an environment that remains highly volatile and uncertain.
Towards a multipolar world
Beyond the persistence, and even intensification, of the Sino-American rivalry, several significant events in recent months have further upset the geopolitical landscape. The BRICS group expansion (Brazil, Russia, India, China, and South Africa) to include six new members (Saudi Arabia, Argentina, Egypt, UAE, Ethiopia and Iran), which some believe will mark the end of the predominance of the G7 and with it the post-war world order.However, the ability of the BRICS+ to offer an alternative vision and take concrete steps to compete with the G7 is likely to remain limited (non-aligned objectives, tensions between China and India).
Inflation eases, but is not overcome
As anticipated in our previous Barometers, inflation has continued to recede “mechanically” in recent…
