Pimco: Inflation is down to 3%

By Giorgos Lambres

Gordon Harding, vice president and fixed income specialist at Pempco, spoke of a clearly improved year in which there will be an economic recovery and after the extreme volatility that preceded the markets in 2022, more signs of stabilization will be recorded. In his speech titled “Peak Inflation and Rates: How Will Risky Assets Perform and Will Greek Assets Show Resilience?” In the context of the 15th Annual Outlook Dinner for CFA Greece, where the Managing Director of HEXA, Yanos Kontopoulos, spoke about the broader market environment, noting that the extreme volatility that appeared in the bond markets came as a result of inflation that was much higher than the levels he expected. many.

It should be noted that Pimco has the ability to make estimates for a period of 3 to 6 months in order to guide based on these future investments and as Harding said, among other things, inflation, which continues to maintain high levels, this year is expected to approach One of the goals of the US central banks and the eurozone. We recall here that the European Central Bank has estimated that inflation will remain at a consistently high level in the short term through the year, but will decline sharply to 3.6% by the end of 2023. Weakening pressures from energy prices and other rising costs combined with policy actions European Central Bank monetary, according to the ECB, inflation can reach the 2% target by the second half of 2025.

‘The economy is more fruitful this year’

But for his part, the CEO of Pimco expected that the economy this year will be more fruitful at all levels. It was drawn up with the assessment of the European Central Bank that inflation, which has reached historical highs in 15 years in America as well as in the Eurozone, will contract significantly in the near future mainly due to lower energy prices.

“Over the past year, inflation has shown signs of a significant increase, also affected by the pandemic, which has boosted demand for many inflation-related services and reached 15-year highs in America and even the eurozone. The move from 8% to 4% is a transition,” Gordon Harding said. From 4% to 2% is much more difficult.” However, he estimated that inflation would fall to around 3%, close to central banks’ target, but not lower than that.

We haven’t seen the full extent of the impact on the economy.

As for the eurozone, he said there would be no recession, but estimated that pressure could emerge on the economy during the year. He pointed out, “This seems somewhat pessimistic at a time when we see the level of raising investment and shrinking inflation, while banks see a positive overall environment for bonds.”

He stressed, however, that we have not seen the overall impact of inflation on the economy. “Because when we have a significant increase in the cost of borrowing, this will have a reasonable effect on consumption and investments. The reason is that where someone used to borrow at 5%, now they are borrowing at 8%, 9% and even with a higher rate of interest.”

In any case, he added, the recession will not be too severe, because although it will take enough time to reduce inflation from 4% to 2%, there will be an increase in unemployment in order to reduce the level of inflation in the eurozone. In this context, it was estimated that we would witness an average increase in the unemployment rate in all member states by about 1.5%.

Kontopoulos: the overall performance of the Athens Stock Exchange increased by 35.1%

On his part, HEXA President, Giannis Kontopoulos, who participated in the same event, made positive assessments of the stock market scene in Greece. Citing the estimates of analysts, namely Pantelakis Securities, Axia Ventures, Piraeus Securities and Eurobank Equities, he said that until February 16, the Greek stock market index increased by 17.3% compared to last year, while from February 16 to December 31, 2023, he talked about an increase of 15.2%. Referring to the general assessment he made for 2023 on the level of performance of the Athens Stock Exchange, he indicated an increase of 35.1%.