How to Incorporate Fidelity Economic Outlook for 2023 in Your Trading

6 min read

Fidelity’s just released 56-page outlook report for 2023 is chock-full of key takeaways and opportunities.

Economic Outlook by Fidelity 

The asset manager says central bank policy will probably cause a recession, or a “hard landing,” in 2023. The reason is that the Fed underestimated inflation last year and has been trying to catch up this year. The Fed has been raising rates to control inflation, but if it keeps raising them too high and too fast, it could worsen the economic slowdown.

The Fed’s decisions today will only affect the economy sometime next year. So if the Fed keeps hiking interest rates until inflation hits its 2% yearly target, a “standard” recession could turn into something far more sinister.

Fidelity believes that a recession is likely in the US, but it is nearly certain in Europe and the UK. This is mainly because they are facing bigger energy crises: higher energy prices could keep pushing inflation up, and any last-resort energy blackouts or rationing could drag down business growth. However, since early indications from Europe’s Weather Centre and the UK Met Office suggest that we could be in for a warmer winter, the latter situation is less likely to occur.

It sees an 80% chance of a global recession in the next twelve months. That’s split between 25% for a “deep” recession and 55% for a “shallow” recession.

Fidelity Sees Opportunities in These Areas

Fidelity is playing it safe in the short-term by holding less in stocks and commodities, and instead putting more weight behind dollars and government bonds. However, for more aggressive long-term investors, there are opportunities in stocks, bonds, and real estate.


Fidelity is playing it safe with stocks, especially European ones, because it thinks a hard landing would hurt companies’ profits more than most analysts expect. However, there could be opportunities further afield. China seems to be gearing up in the wake of relaxed Covid policies, plus it’s investing in green technologies and infrastructure – and that could all be good for Chinese stocks in the long run. You can check out the iShares MSCI China ETF (ticker: MCHI, expense ratio: 0.57%) for a big basket of Chinese stocks, or get more tactical with Russell’s tailored solutions over here.

Fidelity is expecting strong earnings growth from Asia-Pacific companies, especially in India and Indonesia. The growing populations and rising incomes in these countries are driving their economies forward. If you’re looking to invest in the India earnings story, you can check out the WisdomTree India Earnings Fund (EPI, 0.83%). I’ve also written about why I personally like Indian stocks right here.

Indonesia is a net energy exporter, making it one of the few countries to benefit from rising energy prices. The iShares MSCI Indonesia ETF (EIDO, 0.57%) is a easy way to play that story.


Bonds are a type of loan in which you lend money to a country or company. With rising interest rates, you can earn more from the interest on these loans. This is one of the reasons why Fidelity is finding bonds more attractive again – they offer higher yields than the dividends you get from stocks.

In spite of all the debt in the system, Fidelity believes there is a greater chance of bond issuers not being able to pay interest than the market is indicating – especially with higher yielding, riskier bonds. However, there are some safer investments: Fidelity prefers “investment-grade” bonds from companies with solid balance sheets, and likes government bonds because they offer lower risks of defaults and would perform better in a difficult economic situation.

You may want to consider the iShares Global Corp Bond UCITS ETF (CORP, 0.2%) for a global spread of higher-quality company bonds, or the iShares Global Govt Bond UCITS ETF (IGLO, 0.20%) for a portfolio of developed countries’ government bonds.


This could be a tough year for real estate, especially in the first half. Because bricks and mortar aren’t as liquid as stocks and bonds, property tends to drop off later down the line as landlords and buyers negotiate property sales. But we’re not expecting a 2008 repeat: there are still plenty of buyers out there, and big investors like to own property to stay diversified. And even though prices might dip lower, it’s already a buyers’ market in some locations right now – especially for office space in hotspots like London and Paris.

The firm has a compelling idea: investing in energy-efficient buildings. There is some weight to that: higher energy costs will swell demand for buildings that need less power to run, and regulation is moving the goalposts on property sustainability standards. 

That will not only make non-compliant buildings less appealing, but will likely increase the “green premium” for the few compliant ones. If that sounds interesting, the Invesco MSCI Green Building ETF (GBLD, 0.39%) tracks global real estate companies that are jumping on the green bandwagon.

Safe Trading
Team of Elite CurrenSea 🇺🇦❤️

Leave a Reply


This site uses Akismet to reduce spam. Learn how your comment data is processed.

Notify of