We suspect that the resilience of the economy in late-2022 was due to the combination of lower energy prices, increased government support and easing supply problems in industry, while the drag from rising interest rates had not yet been fully felt. The improved global backdrop means that the recession, if there is one, will be milder than we had anticipated. But tighter monetary policy may be a drag on the economy for longer than we had previously thought. Meanwhile, next week we will get the first PMIs for 2023 which we think will have edged up a bit from their December levels.
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