2022 saw a more pronounced than expected global slowdown, due to Russia’s invasion of Ukraine, rising inflation, a tightening of financial conditions and the persistence of the Covid-19 pandemic in China.
Although the clouds have continued to build up over economic prospects in the early months of 2023, rays of light could start to appear in the second half of this year, with the possibility of a recovery in 2024 now taking shape. Forecasts for global growth currently stand at 2.7% in 2023 and 3.2% in 2024.
In the eurozone, the energy crisis will continue to dominate the macroeconomic outlook. After the expected period of turbulence at the beginning of the year, a gradual recovery should slowly start to take shape as the energy crisis eases (economic growth of 0.0% in 2023). Controlled inflation will then be possible, provided that gas supplies are secured before next winter. A recovery is expected in 2024 (+1.8%). Looking at the main economies individually, GDP growth in Spain is expected to be +1.1% in 2023 and then +2.0% in 2024, followed by the Netherlands (0.5% then +1.5%), France (+0.1% and +1.6%), Italy (-0.1% and +1.0%), Belgium (-0.3% and +1.8%), and Germany (-0.7% and +2.2%).
The spike in eurozone inflation in 2022 was a direct consequence of the war in Ukraine and the restarting of economies after the end of the Covid-19 pandemic. Although an optimistic path with inflation brought under control is possible, caution remains necessary. At the end of December 2022, the ECB increased its policy rates by an additional 50bp in order to limit the sharp rise in inflation (+8.4% year-onyear). Current forecasts suggest that inflation will remain high in 2023 (+4.9%), but that it will fall relative to 2022. As a result, the mandate of consumer price inflation of close to 2% is likely to see the ECB make further increases in its rates, starting in the early months of 2023, but these will be more moderate than those seen in 2022.
The increase in the policy rates in 2022 resulted in a significant increase in the cost of money via lending rates. By increasing the cost of borrowing for households and businesses alike, this led to a reduction in demand for credit, putting the brakes on economic activity and beginning to limit the inflationary spiral at the end of 2022.
Over the course of 2022, the European real estate market saw more than €270 billion of investment1, a 23% drop in volumes compared to 2021. After a very good start to the year, the market stood still in the second half.
1The real estate market covers offices, retail, logistics, services and residential assets for institutional investors.
The team
With a university education in local economic development, Daniel While began his career as business establishment consultant to local authorities. In 2006, he joined the Institut de l’Epargne immobilière et Foncière as analyst, and specialised in the world of unlisted real estate funds (SCPIs and OPCIs for France).
He is co-author of the book Les OPCI published by Delmas (September 2008). He joined Primonial REIM in 2017, where he held the position of Development Director, then Research & Strategy Director from 2019.
Henry-Aurélien Natter joined Primonial REIM as Research Manager in January 2018. He has the mission of developing the analyses of the Research & Strategy Department on the real estate markets, the economy and capital in France and in Europe.
Henry-Aurélien Natter began his career at Les Echos Etudes (formerly Eurostaf), then at C&W (formerly DTZ), and lastly at BNP PRE, where he acquired solid and varied experience in real estate research, strategy and finance. He is qualified with an AES degree in Business Management, a Masters Decree in management and SME management, and an International Master in commerce and marketing.
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