What: Visa’s bets for 2023.

Why it is important: Even though many hypotheses are considered, Visa believes that a recession is unavoidable and if so, it might be longer and shallower than the past two ones.

Visa has collected a variety of reports in order to give some insights on the various possible scenarios for 2023 by region, after a year 2022 rigged with high levels of inflation and low margins of manoeuvre for central banks:

-    All eyes are on Europe, where the cost-of-living crisis is harder and taking place later than in other regions. For now, it is unclear to what extent savings from the pandemic episode and the high employment rates are going to act as cushions in the wake of the fall in growth related to interest rates bound to be raised to limit inflation.

-    While there might be a housing crisis about to burst in some countries (albeit milder than the US subprime crisis back in 2009), Visa also bets on the fact that tech companies’ valuations are going to increase, in spite of their current slump.

-    The strength of the US dollar comes at a cost for many countries in the world, which might induce some stress on the financial markets, and it is unclear (if unlikely) if China will be able to act again as the “world engine” for growth.

Visa expects 2023 to see inflation impacting global consumer prices growth and GDP growth, leading to a recession.

What is in store for 2023?