Intesa Sanpaolo : Scenario 2023 – in the shadow of the volcano. Economic prospects are very uncertain…
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Weekly Economic Monitor – 31. March 2023
Intesa Sanpaolo – Research Department
… the series of banking crises in March could make finance conditions significantly tighter even without new rate rises, and in the worst-case scenarios, there is a risk of a deep recession between the end of 2023 and mid-2024. Currently, however, we believe it is relatively more likely that the situation may settle down: in this case, we could see further rises in official rates and a more limited slowdown in economic growth, with a moderate recession in the US.
The week’s market movers
In euro area the week ahead is rather light in terms of data releases. February industrial output in Germany and France should confirm a weak recovery the manufacturing sector. In the same month, German orders are expected to have grown, albeit only slightly. Also in February, the Eurozone PPI should fall for the second consecutive month, on the back of falling energy prices. Lastly, the final reading of March PMI surveys should confirm the resilience of the economy, supported by the recovery in the services sector.
In the week ahead, the main macroeconomic data for March will be released in the United States but are not yet expected to significantly reflect the effects of the turbulences affecting the banking sector. The focus is now also on the weekly updates on bank balance sheets and on the Fed’s balance sheet, to assess the new trends of bank deposits and Fed loans. On the macro front, in March, non-farm payrolls in the private sector are forecast to increase by 250k, slowing marginally from February. The unemployment rate should remain stable at 3.6%. ISM indices are forecast to improve in March, pointing to accelerating growth in the services sector and to a milder contraction in manufacturing. Construction sector spending in February should be stable.
Appendix
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