KIC Discusses Next Year's Economic Outlook with Domestic Institutional Investors Entering London Market

[Asia Economy Reporter Kwangho Lee] Korea Investment Corporation (KIC) organized a meeting to discuss the 2023 global economic and interest rate outlook together with the Korean government in London, public investment institutions, private financial institutions, and the global investment bank HSBC.

KIC announced that it held the 19th London International Financial Cooperation Council on the afternoon of the 1st (local time), hosted by its London branch. The meeting was attended by financial officers in charge of investment from domestic financial institutions including government officials, public investment institutions, securities firms, and banks, as well as the financial attach? stationed in London.

Janet Henry, Global Chief Economist at HSBC, said, “Even if some central banks slow down the pace of tightening, there is still a long way to go before substantial interest rate adjustments and subsequent rate cuts.” She explained that global central banks will prioritize curbing inflation, even at the cost of short-term economic recessions and increased unemployment’s social and economic costs.

Regarding the magnitude of key countries’ benchmark interest rate hikes, she projected that the U.S. Federal Reserve will raise rates to at least 4.75% to 5% by early next year, and the European Central Bank will increase rates up to 3% by the end of next year. However, she added that the pace of hikes may vary depending on the timing and severity of economic recessions.

She explained that, in the medium term, the trade-off between global economic growth and price stability will worsen. She forecasted that countries able to implement rate cuts next year will be limited to some regions such as Brazil.

Yang Changsoo, Head of KIC’s London branch and chair of the London International Financial Cooperation Council meeting, said, “As we wrap up a year with market volatility at an all-time high, it was a valuable time to deeply examine the investment environment including interest rates and economic growth for next year,” adding, “We will continue to strengthen cooperation for stable long-term investments by our country’s public investment institutions in the coming year.”

As a sovereign wealth fund, KIC operates the International Financial Cooperation Council to establish mutual cooperation systems and share excellent overseas investment information with domestic public and private financial institutions operating locally through its overseas branches located in global financial centers (New York, London, Singapore, San Francisco).

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