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Blackrock, one of the largest asset management companies in the world, has warned that 2023 will be a year of recession unlike other recessions in the past. As part of its recently released Global Outlook 2023 report, Blackrock states that a new economic playbook is needed in a world defined by a supply-based economy and high levels of inflation.
Blackrock, an asset management and investment company, has presented its predictions for what the next year may bring to the financial markets. The company, which has an estimated $8 trillion in assets under management, envisions a period of recession caused by central banks’ policies aimed at controlling inflation. However, according to the 2023 Global Outlook report, this recession will be different from previous downturns.
The report explains:
Recession is predicted as central banks race to try to tame inflation. That’s the opposite of previous recessions: loose policy is not on track to support risk assets, in our view.
Furthermore, Blackrock predicts that stocks are likely to suffer more as they have not been priced in for this recession, as the economic damage caused by central banks’ actions continues to build. On inflation, the report states that central banks must stop tightening policy before they reach their intended inflation targets and cause economic crises.
On this, the report concludes that “even with a recession coming, we believe we will live with inflation.”
The firm believes that the new economic configuration requires new ways of meeting the markets, as the old playbook of “buying the dip” will not be effective as there must be a continuous re-evaluation of how the dynamic policies being exercised create economic damage.
As a result, the report declares:
We do not see a return to conditions that will sustain a common bull market for stocks and bonds of the type we experienced in the previous decade.
The firm has also given its opinion on crypto and cryptocurrency companies in the past. Larry Fink, CEO of Blackrock, stated that he believed most cryptocurrency companies would not survive the downfall of FTX, formerly one of the largest cryptocurrency exchanges in the market. However, he acknowledged that blockchain technology will be important as a tool to help tokenize securities as part of next-generation markets.
What do you think of Blackrock’s market predictions for 2023? Tell us in the comments section below.
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