2023 in retrospect

Certainly 2023 has been a momentous year globally with firstly the continuing war in Ukraine and its economic consequences plus the sudden conflagration in the Middle East. The economic slowdown in China and pedestrian economic growth across the world with the prospect of a recession in the US and beyond were ever-present concerns.

Inflation continued to be a major concern for central banks. However, it became clear as the year wore on that action to combat rising inflation – namely interest rate increases – were working with inflation was easing. In the US inflation currently had almost halved from where it was at the beginning of the year and substantially down from its height reached in June 2022. In SA, despite a recent spike, the inflation rate had also dropped to within the SA Reserve Bank’s target range of 3%- 6%.

With the easing of inflation, confidence abounded that the cycle of rising interest rates may now be coming to an end. The US Federal Reserve raised interest rates three times during 2023, as against seven times in 2022. The SA Reserve Bank hiked rates just three times during the year as opposed to six hikes in 2022.

Global GDP growth was down slightly in 2023 at an estimated 2.9% whilst SA growth was a well below par at just under 1%.

Nevertheless, despite the vicissitudes, investment markets have held up rather well during the year despite considerable volatility as we went along. Global equity and bond markets were largely positive and even gold responded well during the latter part of the year. The Rand, however, depreciated by nearly 11% against the USD which of course dampened performance of local assets.

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