Pictet Wealth Management released the global macro outlook for the second half of 2023.

"The global economy continues to diverge in many ways, with Purchasing Managers' Index (PMI) surveys showing that the gap between the booming service sector and the shrinking manufacturing sector is widening around the world," said Chen Dong, head of Asia macroeconomic research at Pictet Wealth Management in Switzerland. There are also differences in business activity between emerging and advanced economies."

Manufacturing activity in advanced economies has been contracting since October 2022, with preliminary data showing new orders slipped further into contraction territory in May. Emerging market manufacturing appears to be more resilient, with manufacturing PMIs remaining just above 50 since the start of the year. Overall, we expect global GDP to expand at a moderate rate of 2.6% this year.

We believe that the US GDP growth in the second quarter will only be slightly positive and will turn negative in the second half of the year. Pressure on the banking sector has eased, but lending conditions have tightened and the job market has started to cool. We think the fed funds rate has peaked at 5-5.25%, but don't expect a rate cut this year.