The recession that never happened
Keith Hiscock joined Interactive Brokers’ Andrew Wilkinson on the IBKR podcast to examine the role of central banking and how the European economic landscape appears to have avoided a recession.
Keith says, “What we’re seeing is a gradual recovery in GDP. Now I think both in Europe and in the UK, there were many commentators who expected there to be a full-blown recession and that hasn’t happened, and they’ve been blindsided by that. But equally, I think the feeling is that the recovery is going to be really quite slow.”
The conversation covers the current economic state in Europe and the UK, focusing on monetary policy, inflation, growth projections, and market outlooks.
- European economy: Rates have likely peaked in Europe and the UK, with gradual reductions expected. Despite concerns, GDP recovery is slow but steady, with challenges in major economies like France and Germany due to competition from Chinese electric vehicle manufacturers.
- European Central Bank’s performance: The ECB has managed inflation reasonably well, aiming for a 2% target by 2025 despite external factors like commodity prices.
- UK economy outlook: Growth in the UK is expected to be slower than in Europe, with modest GDP increases forecasted. Inflation has decreased significantly but remains a factor to watch.
- Market outlook: US markets may outperform European ones in 2024 due to robust economic growth, but European markets could benefit from international trade exposure.
- Currency markets: Low volatility in currency markets is influenced by stable interest rates, but future rate cuts could impact valuations and economic stability.
- Central Bank response to COVID: Central banks faced challenges during the pandemic, balancing economic support and inflation management. Hindsight suggests potential interest rate adjustments, but the circumstances were unique and complex.
Listen on YouTube or via the player below.
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If you would prefer to read the interview, a transcript is available on IBKR Campus.
