IPM – Edition November 2023

As we approach the end of 2023, markets are grappling with competing dynamics. US President Harry S Truman once quipped, “Bring me a one-handed Economist. All my Economists say, ‘on the one hand... on the other’.” Seventy years later, investors have more data, faster information flow and yet face similar complexities when trying to foretell the future. On the one hand, inflation is slowing, and economic growth persists. On the other hand, the weight of higher interest rates takes time to impact global economies while political unrest looms.

One year ago, rising interest rates were just beginning to combat near-record inflation. War in Ukraine added risk to forecasts, and many economic predictions called for a contraction before the end of 2023. Fast forward to today, unrest in the Middle East now captures headlines, and instead of painful recessions, global economic growth held up during the middle of the year.

For most economies, interest rate hikes are at, or nearing, an end. Despite the economic outperformance, risk premiums still fall short of enticing more buyers to bid. Sellers may be able to afford to hold. In US core real estate, net operating income grew 4.2% in the year ended September 2023, 50 basis points higher than headline inflation.

Will contractions begin? Will transaction markets accelerate? Read on for our latest intel on global economies and implications for private markets investments.