2023全球宏观展望（英）-高盛

Note:Thefollowingisaredactedversionoftheoriginalreportpublishedon16November2022[24pgs].GlobalEconomicsAnalystMacroOutlook2023:ThisCycleIsDifferent 16November2022|10:59AMESTGlobalEconomicsAnalystMacroOutlook2023:ThisCycleIsDifferentGlobalgrowthslowedthrough2022onadiminishingreopeningboost,fiscalmonetarytightening,Covidrestrictionsandpropertyslump,andtheRussia-Ukraineexpectglobalgrowthofjustin2023,asUSresiliencecontrastswithaEuropeanrecessionandabumpyreopeninginChina.TheUSshouldnarrowlyavoidrecessionascorePCEinflationslowsfrom5%nowto3%inlate2023witha½ppriseintheunemploymentrate.keepgrowthbelowpotentialamidststrongerrealincomegrowth,wenowseethehikinganother125bptoapeakof5-5.25%.expectcutsinHowcancoreinflationfallsowithasmallemploymenthit?Thereason,wethink,isthatthiscycleisdifferentfrompriorhigh-inflationperiods.First,post-pandemiclabormarketoverheatingshowedupnotinexcessiveemploymentbutinunprecedentedjobopenings,whicharelesspainfultounwind.Second,thedisinflationaryimpactoftherecentnormalizationinchainsandrentalhousingmarketsstillhasalongtogo.Andthird,long-terminflationexpectationsremainwell-anchored.TheEuroareaandtheUKareprobablyinrecession,mainlybecauseoftherealincomehitfromsurgingenergybills.ButweexpectonlyamilddownturnasEuropehasalreadymanagedtocutRussiangasimportswithoutcrushingactivityandislikelytobenefitfromthesamepost-pandemicimprovementsarehelpingavoidUSrecession.Givenreducedrisksofadeepdownturnandpersistentinflation,wenowexpecthikesthroughMaywitha3%ECBpeak.ChinaislikelytogrowslowlyinH1asanAprilreopeninginitiallytriggersanincreaseinCovidcasesthatkeepscautionhigh,butshouldacceleratesharplyH2onareopeningboost.OurChinaviewremainscautiousbecauseofthelongslideinthepropertymarketaswellasslowerpotentialgrowth(reflectingweaknessinbothdemographicsandproductivity).SeveralcentralbanksinCentral/EasternEuropeandLatinAmericastartedrateswellbeforetheirDMpeers.Whilenonehasclearlyalandingyet,activityhasbeenresilientandinflationisnowcomingdowninsomecountries,especiallyBrazil.CEEisinamoredifficultpositionbecauseofitscommodityexposure,highinflation,andongoingmonetarytightening.

JanHatzius+1(212)902-0394|jan.hatzius@GoldmanSachs&Co.LLCDaanStruyven+1(212)357-4172|daan.struyven@GoldmanSachs&Co.LLCYuliaZhestkova+1(646)446-3905|yulia.zhestkova@GoldmanSachs&Co.LLCDeveshKodnani+1(917)343-9216|devesh.kodnani@GoldmanSachs&Co.LLCInvestorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcertificationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto/research/hedge.html.GoldmanGoldmanSachsGlobalEconomicsAnalyst1616November2022PAGE24MacroOutlook2023:ThisCycleIsDifferentGlobalgrowthslowedsharplythrough2022onadiminishingreopeningboost,fiscalmonetarytightening,ongoingCovidrestrictionsandpropertyslump,andtheenergysupplyshockresultingfromtheRussia-Ukraineexpecttheworldtocontinuegrowingatabelow-trendpaceofin2023,withamildrecessioninEuropeandabumpyreopeninginChinabutalsoimportantpocketsofresilienceintheUSandsomeEMearlyhikers,asBrazil.Exhibit1:SlowGrowthin2023,ButAbove-ConsensusontheUSRealGDPGrowth AnnualAverage Q4/Q4Next4Quarters2022 2023 2024 2023 2022Q4-2023Q3 PotentialPercentChangeyoyGSConsensusGSConsensusGSConsensus GS GS GSUSEuroArea3.33.1-0.1-0.0-0.51.1Germany1.81.6-0.6--0.3-0.91.3France0.3-0.11.1Italy3.83.5-0.1--0.1-0.70.8Spain1.02.12.0JapanUK4.44.2-1.2--0.8-1.61.4CanadaChina3.04.24.2IndiaBrazil1.61.01.9Russia-3.3-4.0-1.3-WorldNote:Allforecastscalculatedoncalendaryearbasis.2022-2024areGSforecasts.PotentialgrowthisthemedianofGSestimatesfor2023-25fortheUS,JapanandCanada,ourlong-runestimatefortheEuropeaneconomiesand2023forEMeconomies.IMFforecastsusedforIndia2023and2024consensuswhenquartersnotavailableinBloomberg.TheglobalgrowthaggregatesusemarketFXcountryweights.Source:Bloomberg,GoldmanSachsGlobalInvestmentResearchGoldmanSachsGoldmanSachsGlobalEconomicsAnalystUSLikelytoAvoidRecessionInthepastUSgrowthhasslowedtoabelow-potentialpaceofabout1%becauseofadiminishingreopeningboost,decliningrealdisposableincome(drivenbyfiscalnormalizationandhighinflation),andaggressivemonetarytightening.Inourforecast,growthremainsatroughlythispacein2023.Unlikeayearago,whenourforecastforboth2022and2023wasbelowconsensusbecauseweexpectedanegativeimpactofmonetaryandespeciallyfiscaltightening,ourcurrent2023forecastiswellaboveconsensus(Exhibit2).Exhibit2:Our2023USGrowthForecastIsNowWellAboveConsensusPercentchange,yearago Percentchange,yearago3.0

US2023RealGDPGrowthForecasts

3.02.5 2.52.0 2.01.5 1.51.0 1.00.50.0

GSBloombergConsensus

Jan-2022 Apr-2022 Jul-2022 Oct-2022Source:Bloomberg,GoldmanSachsGlobalInvestmentResearchOurdisagreementwiththeconsensusisevenmorevisiblewhenwefocusonrecessionprobabilities.AsshowninExhibit3,weestimatea35%probabilitythattheUSeconomyentersrecessionoverthenextmonths,wellbelowthemedianof65%amongtheforecastersinthelatestWallStreetJournalsurveyandtowardthebottomoftherange.Exhibit3:WeThinkThataUSRecessionintheNext12MonthsIsLessLikelyThanMostOtherForecasters1009080

EstimatedUSRecessionProbability(Next12Months),WallStreetJournalOctober2022ForecasterSurveyGSForecast:35%

Percent10070 ConsensusMedianForecast:65% 7060 6050 5040 4030 3020 2010 100 00 10 20 30 40 50NumberofForecastersSource:TheWallStreetJournal,GoldmanSachsGlobalInvestmentResearchWhyisourrecessionprobability—whilemorethantwiceashighastheunconditionalprobabilityofenteringrecessioninanygiven12-monthperiod—stillclearlybelow50%?Oneimmediatereasonisthattheincomingactivitydataarenowhereclosetorecessionary.TheadvanceGDPreportshowed2.6%(annualized)growthinQ3,nonfarmpayrollsgrew261kinandtherewere225kinitialjoblessclaimsintheweekofNovember5.Morefundamentally,therearestrongreasonstoexpectpositivegrowthincomingquarters.besure,thetighteninginfinancialconditionsisweighingheavilyongrowth,tothetuneofnearly2ppatpresent.ButrealdisposablepersonalincomeisreboundingfromtheplungeseeninH1—whenfiscaltighteningandsharplyhigherinflationtooktheirtoll—toapaceof3%+overthenextyear(Exhibit4).Andwhiletherearerisksonbothsides,thinktherealincomeupturnislikelytobethestrongerforceaswemovethrough2023,especiallybecausethefinancialconditionsdragwilllikelydiminishassumingofficialsdonotdeliverdramaticallymoretighteningthantheratesmarketiscurrentlypricing.Exhibit4:TheBoostFromtheReboundinRealIncomevs.theDragFromFinancialConditionsPercentchangevs.Dec.2020 Percentchangevs.Dec.2020 Percentagepoints PercentagepointsHouseholdDisposableHouseholdDisposableIncomeTransfers(Nominal)OtherIncome(Nominal)InflationRealDisposableIncome20212022202325 20 15 10 5 50 0-5 -5

RealUSGDPGrowthImpulsefromGSFCI,3-QuarterCenteredMovingAverage

2.01.51.00.50.0-0.5-1.0-1.5

-10-2.0NovSepJulMayMarJanNovSepJulMayMarJanNovSepJulMayMarJanNovSepJulMayMarJanNovSepJulMayMarJanNovSepJulMayMarJan

2 3 4 1 2 32021

4 1 2 2023

-2.0-2.5Note:TheimpulsesassumethattheFCIstaysflatafterNovember15,2022.Source:GoldmanSachsGlobalInvestmentResearchButthemostfundamentalquestionisthis:howcantheFedbringdowninflationby2percentagepointsoverthenextyearwithonlya½ppincreaseintheunemploymentrate(Exhibit5)?Doesn’tthisflyinthefaceoftheexperiencefrompriorhigh-inflationepisodes—mostnotablythe1970s—thatendedwithamuchbiggerincreaseinunemployment?Ouransweristhatthiscycleisdifferentfrompriorhigh-inflationperiods.Exhibit5:WeExpectCorePCEInflationtoDeclineby2ppbyEnd-2023WithOnlya½ppIncreaseintheUnemploymentRatePercentchange,yearago

USCorePCEInflation

Percentchange,yearago

Percent PercentUSUnemploymentRate6 6 7 75 56 64 45 53 34 42 21Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24Jul-24Note:DashedlinesindicateGSforecasts.

1 3 3Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24Jul-24Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchThefirstreasonwhythiscycleisdifferentisthatpost-pandemiclabormarketoverheatingshowedupnotinexcessiveemploymentbutinunprecedentedjobopenings.AsshowninExhibit6,jobopeningssurgedin2020-2021asemployerssoughttokeepupwiththestrongesteconomicrecoveryonrecordamidstcontinuingCovidfearsandexceptionallygenerousunemploymentbenefits.asashareofthelaborforceonlyrosetoroughlythepre-pandemiclevel,notabove.(Andemploymentrelativetotheworking-agepopulationremainsbelowthepre-pandemiclevel.)Exhibit6:Post-PandemicLaborMarketOverheatingShowedUpNotinExcessiveEmploymentbutUnprecedentedJobOpeningsJobOpeningsHouseholdEmploymentJobOpeningsHouseholdEmployment104102100989694929088

USLaborDemand

Percentoflaborforce1061041021002006 2008 2010 2012 2014 2016 2018 2020 2022Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchNow,however,theenvironmentlooksverydifferent.Demandhasslowed,thepandemichassubsided,unemploymentbenefitshavenormalized,andexcesssavingsarecomingdown.Itisthereforenotsurprisingthatjobopeningsandourjobs-workersgap—totallabordemandminustotallaborsupply—arecomingdownquickly.BasedontimelyjobopeningsmeasuresfromLinkupandIndeed,weestimatethatthejobs-workersgaphasdeclinedfromapeakofnearly6milliontojustover4million,nearlyhalfofthewaytothe2mnlevelrequiredtoslowwagegrowthtoaratecompatiblewiththeinflationtarget(Exhibitpanel).Partlybecauseofthereductioninthejobs-workersgap,timelymeasuresofnominalwagegrowth,position-adjustedaveragehourlyearningsandourmonthlywagesurveycomposite,haveslowedtolevelsconsistentwith4½%wagegrowth(Exhibitrightpanel).Exhibit7:OurUSJobs-WorkersGapMeasureofExcessLaborDemandIsTrendingDown;NominalWageGrowthIsSlowingRequiredbyEnd-2023,GSEstimateJobs-WorkersGap:JOLTSJobOpeningsJobs-WorkersRequiredbyEnd-2023,GSEstimateJobs-WorkersGap:JOLTSJobOpeningsJobs-WorkersGap:AlternativeJobOpenings543210-1-2-3

USJobs-Workers

6543210

Percentchange8EmploymentCostIndex*(Left)AverageHourlyEarnings(Composition-Adj)**(Left)EmploymentCostIndex*(Left)AverageHourlyEarnings(Composition-Adj)**(Left)MonthlyWageSurveys***(Right)6543210

0-4Jan-21 May-21 Sep-21 Jan-22 May-22

-4-12008 2010 2012 2014 2016 2018 2020

-10*ECIwagesandsalariesprivatesectorexincentives(SAbyHaver),qoqannualrate.**6mannualrate.***verageofDallasFedmanufacturing,DallasFedservices,.clsbFfritonoficrFvivers(ttiil.KansasFedservices,andNFIB.Whereavailable,weaveragecurrentandexpectedwagechangesforeachsurveySource:HaverAnalytics,Linkup,Indeed,GoldmanSachsGlobalInvestmentResearchThesecondreasonwhythiscycleisdifferentisthattherecentnormalizationinsupplychainsandrentalhousingmarketsisasourceofdisinflationnotseeninprevioushigh-inflationepisodesasthe1970s,anditisonlybeginningtoshowupintheofficialnumbers(Exhibit8).Onthegoodsside,theongoingrotationfromgoodstoservicesspending,healingsupplychains,andreboundinginventorylevelsshouldputdownwardpressureoncoregoodsprices.Ontheservicesside,askingrentsonnewleaseshavedeceleratedsharplytheone-timejumpinrentsrelatedtotheworkfromhome-relatedincreaseindemandforspace.TheOctoberCPIreportsuggeststhelaggingmeasureofsequentialmonthlyofficialCPIshelterinflation—whichcapturesbothnewandcontinuingleases—haslikelypeakedtoo.Althoughyear-on-yearshelterinflationwilllikelyrisethroughnextspringasrentsoncontinuingleasescatchuptohighermarketrates,itissettoslowExhibit8:DisinflationaryImpactofNormalizingSupplyChainsandRentalMarketsStillHasaLongWaytoGoZ-Score

Percentchange,

Percentchange,4 SupplierDeliveryTimes,AverageofBusinessSurveysManufacturingPrices,AverageofBusinessSurveys

4 monthlyannualrate50 ApartmentList:AskingRents,SAbyGS(Left)

monthlyannualrate123 32 2

CPI:RentofPrimaryResidence(Right)9201 1 6100 003-1 -1-10-22012 2014 2016 2018 2020

-2-20 02017 2018 2019 2020 2021 2022SupplierdeliverytimesandmanufacturingpricespaidsurveysarefromISM,ISMChicago,NYFed,PhiladelphiaFed,RichmondFed,DallasFed,andKansasCityFed,aswellasCreightonUniversityforsupplierdeliverytimesonly.Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchThethirdreasonisthatlong-terminflationexpectationsremainwell-anchored,especiallyrelativetothe1970s.Thisistrueforoftheavailablemeasures,namelythosebasedon1)surveysofhouseholds,2)surveysofeconomicforecasters,and3)inflation-protectedbonds.Measuresofshort-terminflationexpectationsremainrelativelyhigh,butofthisprobablyreflectsthespikeincommoditypricesandshouldwaneifcommoditypriceslevelThefactthatinflationhasonlybeenhighashortandunusualpandemicperiodalsosuggeststhatelevatedinflationisnotentrenched(Exhibit9).Exhibit9:AnchoredLong-RunInflationExpectationsMeasuresandaShortPeriodofHighInflationGreatInflationGreatGreatInflationGreatModerationReopeningAverage,2000-2019Covid

USLong-RunInflationExpectationsUniversityofMichiganSurvey,Next5-10Years

Percent10

Percent

ShareofMonthsinPrior10YearswithYoYCorePCEAbove2.5%

Percent9 9100

1008 880 807 76 660 605 54 440 403 32 220 201 10 0 0 01979198419891994199920042009201420192024 1970 1980 1990 2000 2010 2020Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchtogether,weexpectcorePCEinflationtodeclinefrom5.1%Septemberto2.9%inDecember2023(ExhibitWeexpectsupply-constraineddurablegoodswithstillelevatedmargins,suchasusedcars,todrivenearlyhalftheslowdowninoverallcoreinflation.Exhibit10:CorePCEInflationWillLikelyDeclineto2.9%byEnd-2023onGoodsDisinflationandShelterInflationinH2Percentchange,yearago Percentchange,yearago6 ContributionstoYear-on-YearCorePCEInflation 6Supply-Constrained*5 OtherGoods 54 TravelOtherServices3 HealthcareShelter210 Jan-19Apr-19Jul-19Oct-19Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23Jan-24Apr-24Jul-24Oct-24

GSForecast43210-1*New,used,andrentalcars,furniture,sportingequipment,householdappliances,sportsandrecreationalvehicles,andvideo,audio,photo,andinfo.equipment.Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchOnemightassumethatourrelativelyoptimisticinflationforecasttranslatesintoarelativelydovishcall.Butthatassumptionwouldbewrong.Thereasoncomestotheinterplaybetweenrealincomeandfinancialconditions.Asrealincomerecovers,anegativeFCIgrowthimpulseisrequiredtokeepgrowthbelowpotentialcontinuerebalancingthelabormarket.thenegativeFCIimpulseonsequentialgrowthwilllikelydiminishfromitscurrentdragofaround2ppannualizedbecauseitdependsonthechangein,ratherthanthelevelfinancialconditions(Exhibit4,rightpanel).Asaresult,andevenunderourrelativelyoptimisticinflationforecast,additionalratehikesofatleastasasmarketsarenowpricingarelikelyrequiredtokeepthelabormarketadjustmentgoing.FollowingtheFCIeasingoverthepastmonth,wenowexpectanadditional125bpofratehikes(vs.withadownshiftinthehikingpaceto50bpinDecember,andthreesmaller25bphikesinMarch,andnowalsoOurnew5-5.25%peakfundsrateismodestlyabovemarketpricing(ExhibitExhibit11:WeExpect125bpofAdditionalFundsRateHikesandNoCutsin2023Percent5.55.0

RateHikesatFOMCMeetings33bp25bp15bp54bp25bp

25bp

5.00-5.25%

Percent5.55.0

Sizeofrate

FOMCEstimateofLonger-Run

4.48%

4.54.03.53.02.52.01.5

ActualGSForecastMarketPricing

1.00.0Mar2022

May

Jun

Jul

Sep

Nov

Dec

Feb

Mar

May

End-23LevelSource:Bloomberg,GoldmanSachsGlobalInvestmentResearchWitharesilientlabormarketandstillelevatedinflation,wedon’tseeanyratecutsin2023unlesstheeconomyentersrecessionafterall.Inourno-recessionforecast,theFedonlyimplementsafirstgentle25bpcutin2024Q2.Thisbaselineof“highratesforlonger”wouldagainillustratehowdifferentthiscycleisasthefirstFedcutinthemedianhikingcyclehashistoricallycomeroughlysixmonthsafterthelasthike.AMildRecessioninEuropeIncontrasttotheUS,theEuroareaandtheUKareprobablyinrecession.Thereasonforthisisthemuchbiggerandmoredrawn-outincreaseinhouseholdenergybills,whichshouldboostheadlineinflationtopeaksof12%intheEuroareaand11%intheUK,farhigherthanintheUS(Exhibit12,leftpanel).Exhibit12:ABiggerEnergyShockinEuropeImpliesaWorseOutlookforInflationandRealIncomeSource:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchInturn,highinflationissettoweighonrealincome,consumption,andindustrialproduction.forecastfurtherdeclinesinrealincomeof1½%intheEuroareathrough2023Q1and3%intheUKthrough2023Q2,beforeapickupinH2(Exhibitrightpanel).Theplungeintimelyandforward-lookingsurveysofgas-intensiveEuropeanindustriesaschemicalsandmetalsalsosuggeststhatrisingenergycostswilllowerproduction(ExhibitAsaresult,welookforcumulativedeclinesinrealGDPof0.7%intheEuroarea(2022Q4-2023Q2)andintheUK(2022Q3-2023Q2).Exhibit13:SurveysofGas-IntensiveEuropeanIndustriesHavePlungedSource:HaverAnalytics,Eurostat,GoldmanSachsGlobalInvestmentResearchHowever,wedon’texpectadeepEuropeandownturn,barringaverycoldwinterthatimposesmoresevereenergyrationingontheindustrialsectorinordertokeeppeoplewarmintheirhomes.Already,EuropehascutRussiangasimportsby80%andtotalgasconsumptionby20-25%withoutcrushingaggregateactivity.Infact,mostofthehardeconomicdataopposedtothesurveys)continuetoholdupremarkablywellsowithindustrialproductionmovingrealGDPstillupintheEuroareainQ3(thoughdownslightlyintheUK),andlabormarketsholdingupsoWethinkthereasonforthisresilienceisthathouseholdenergysavingsandsubstitutiontootherenergysourceshavehelpedabsorbthecollapseinRussiangasimports.Alongwithmildweather,thesesavingshaveboostedgasstorage,reducedTTFgaspricesby60%fromtheirpeak,andreduceddownsideriskfromaverycoldwinter.Europeislikelytobenefitfromthreesimilarpost-pandemicsourcesofresiliencethatarehelpingtheUSavoidrecessionaltogether.First,ExhibitshowsthattheriseinGermanproductionofchip-intensiveitemsandcars—wherepandemicbottlenecksarestilleasing—hasapproximatelyoffsettheongoingdeclineinenergy-intensiveproduction.Exhibit14:TheEasinginPandemicSupplyConstraintsHasRoughlyOffsettheDeclineinEnergy-IntensiveGermanIndustrialProductionPercentchangesinceDec.321

GermanIndustrialProductionAutomotiveSector(Right)OtherSectors(Right)Gas-IntensiveSectors(Right)Chip-IntensiveSectors(Right)Total(Left)

Percentagepointcontribution3210 0-1 -1-2 -2-3 -3-4 -4-5 -5Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchSecond,anydeclineinthehouseholdsavingratewouldsupportconsumerspending,happenedintheUSwhenrealincomeplungedinearly2022.ExhibitpointstoroominEuropeforsavingratestofallandforconsumercreditgrowthtoup(althoughlikelybylessthanintheUSbecauseEuropeanhouseholdshaverelativelylimitedexcesssavings).Third,whilethebulkofreopeninggainsarebehindus,EuropeisstillbenefitingsomewhatfromareboundintheserviceExhibit15:RoominEuropefortheSavingRatetoFallandConsumerCredittoRise

ChangeintheHouseholdSavingRate

US:RevolvingConsumer US:RevolvingConsumerCreditUK:CreditCardLending EuroArea:ConsumerCreditUpto5Years

ConsumerCredit

December2019=100pointsUSUS UKEuroArea

Since2019Q4

points11025

11020

105

10515 15100

10010 1095 955 5 90 900 0 85 85-5 -580 80-10

2018 2019 2020 2021

-1075 752015 2016 2017 2018 2019 2020 2021 2022Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchWhilerisksofadeeprecessionhaverecededsomewhatandourcommoditystrategistsnowlookforamorelimitedriseinEuropeangaspricesnextweexpectGDPtoreboundsharplyinEuropeonceitexitsamildrecession.Themainreasonisthatenergypriceswilllikelystayhighuntilsufficientnewenergysupplyand/ormajorefficiencygainsmaterialize.Moreover,fiscalpolicyturnsshouldturnintoadragfromthesecondhalfof2023onwards.Incorporatingboththeresilienceinincomingharddataandourlesselevatedpathforgasprices,wehavenudgedupourEuroarea2023growthforecastto-0.1%(from-0.4%previously).WhataboutEuropeancoreinflation?Althoughcommoditiesdrovetheinitialheadlinesurge,pricepressureshavebroadenedsignificantlyacrosscorecategoriesinboththeEuroareaandtheUKfollowingupsideinflationsurprises(Exhibit16,leftpanel).Infact,UKcorepricepressuresarenowthebroadestacrosstheG10,withaperfectstormofanenergycrisis(likecontinentalEurope)andanoverheatedlabormarket(liketheUS).Giventhisstrongmomentum,weexpectEuroareacoreinflationtoedgeupfurthertoapeakof5.3%inDecember,beforegraduallydecliningtojustabove3%byend-2023ongoodsdisinflation.IntheUK,wethinkthatcoreinflationispeakingrightaroundnowandwillalsodeclineto3%byend-2023.Exhibit16:BroadCorePricePressuresinEuropeImplyAdditionalECBandBoEHikestoPeaksof3%and4.5%,RespectivelySource:HaverAnalytics,GoldmanSachsGlobalInvestmentResearchGivenreducedrisksofdeeprecessionandpersistentinflationarypressures,wenowexpecttheECBtohikethroughMaywithanadditionalofratehikestoapeakdepositrateof3%(vs.2.75%previously).Alongwiththereductioninheadlineinflationpressuresfromgasprices,theemphasisonsubstantialratehikessofarincreasesourconvictionthattheECBwillstepdownthepaceto50bpininparallelwiththemaintainourforecastforasecond50bphikeinFebruarybut,giventhefirmerdemandoutlook,nowlookfortwoadditionalsmaller25bphikesattheMarchandMaymeetings.Therisksaroundourpeak3%ECBratearetwo-sided,withupsideriskfrompotentiallymorepersistentcoreinflationanddownsideriskfromadeeperrecessionorapossibleflare-upinsovereignriskinGiventhetightlabormarket,highwagepressures,andfirminflation,weexpecttheBoEtohikeBankRatebyanadditionaltoaterminalrateof4.5%.China’sBumpyReopeningOur2023Chinaoutlookisastoryoftwohalveswithslowgrowthinthefirsthalffollowedbyamorepronouncedreboundinthesecondhalfastheeconomyreopens(Exhibit17).WeexpectweakgrowthinQ4andQ1astheZeroCovidPolicy(ZCP)likelystaysinplaceduringthewinter.Infact,therecentsharpriseincasesledustohaveasignificantlybelow-consensusQ4estimateof1.2%annualized.Exhibit17:WeakGrowthThroughH1;ReboundinH2GSBloombergConsensusGSBloombergConsensusQ42022Q1Q2Q3Q42023

ChinaReal

Percentchange,quarterlyannualrate1210 108 86 64 42 20 0Source:Bloomberg,GoldmanSachsGlobalInvestmentResearchAlthoughtheleadershiphasclearlysignaledthatitaimstoexitwedonotexpectactualreopeningtostartuntilApril.Thebasicreasonforthisisthatmedicalandcommunicationpreparationswilltaketime.Lessthan70%ofthe60+agegroupinMainlandChinaaretriple-vaccinated(Exhibit18),anddatafromHongKongshowthattheunvaccinatedelderlyremainatseriousriskofsevereoutcomes.Asaresult,Chinawillneedtosignificantlyrampupitsvaccinationpacefromthecurrent100k/dayreopeningcansafelybegin.Exhibit18:ChinaWillNeedtoRampUpVaccinationsBeforeReopeningCanSafelyBeginPercentof

IndicatorsofCovidHealthRisk

Bedsper100k

DailyCovid-19VaccinationsAdministeredinChina(7-DayMovingAverage)

Millionsperday35 UnvaccinatedElderly*(left)ICUBeds(right)3025201510

4025 25353020 202515 15201510 10105 5 5 50

HK Japan

0ChinaGermany US 0 0*MainlandChina(3dosesofChinesevaccine),HongKong(2dosesofmRNAvaccineor3dosesofChinesevaccine),Japan,Spain,andtheUS(2dosesofmRNAvaccine).

Jan-2021 Jun-2021 Nov-2021 Apr-2022 Sep-2022Source:NHC,Wind,GovernmentofHongKong,GoldmanSachsGlobalInvestmentResearchDespiteourAprilreopeningbaseline,weforecastQ2growthofjust2%annualizedonourassumptionthatreopeninginitiallytriggersanincreaseininfectionsthatkeepscautionhigh.WeakgrowthinEastAsianeconomiessuchasSouthKorea,Taiwan,andHongKongduringthefirstquarterofexitingZCPalsosupportsoursoftQ2forecast.Incontrast,welookforameaningfulreopeninggrowthboostinH2,whichwilllikelyextendinto2024.AsZCPiscurrentlystillsubtractingabout4-5%fromthelevelofGDP,weseesubstantialroomforacyclicalreboundasimmunitylevelsriseandmosthouseholdslearntolivewiththevirus.Althoughclearlyaboveconsensus,ourQ3andQ4forecastsof10%and6%annualizedarenotspectacularrelativetootherinternationalreopeningexperiences.ThisisbecauseweexpectacontinueddragfromCovidcautionaswellasotherheadwinds,somecyclicalandsomemorestructural.Onthecyclicalside,fiscalpolicyissettotightenifthedomesticeconomyrebounds,andpandemic-relatedexportboomshouldfadeasglobaldemandfortech,housing,andCovid-relatedproductsslowsOnthestructuralside,weseethecontractionofthepropertysectorandUSchipexpor