The World Economy Outlook for 2023 Is Actually Not That Bad!

Lagarde and Georgieva became a bit more optimistic about the world economy. Are their views justified? And what does it mean for silver?

The World Economic Forum Annual Meeting 2023 in Davos ended last week. After deciding the fate of humanity in the new year, the Illuminati, Reptilians, and other rulers of the world returned home (I’m joking, obviously, referring to conspiracy theories about the Davos Clique).

Most of the time, the forum wasn’t very exciting, but it ended with cautious optimism about the state of the world economy. And you know, to express something even remotely optimistic these days is a revolutionary act. To the point: ECB President Christine Lagarde said that 2023 “is not a brilliant year, but it is a lot better than what we had feared.”

Similarly, Kristalina Georgieva, Managing Director of the IMF, admitted that “my message is less bad than we feared a couple of months ago — but less bad doesn’t quite yet mean good.” So, although the outlook could be a bit better now, we have to be cautious and avoid getting too optimistic. After all, 2.7% global growth is still “not fabulous”, while inflation remains elevated and could be increased by the reopening of China. Thus, realism is essential and central banks should stay put.

Is This Cautious Optimism Justified?

No. To be clear: I admit that the pendulum may have swung too far into the bearish side and that some pessimists might have been too pessimistic in recent months. However, it’s also possible that the markets are now too optimistic. Remember August 2022? Wall Street got excited about a slowdown in the inflation rate and the Fed’s imminent pivot. But after a short upward move, the stock market continued its decline in September and October.

You see, the problem is that the prospect of higher growth with lower inflation is unlikely. It’s not plausible that the central bank could bring inflation back to 2% without a significant decrease in aggregate demand. Hence, people betting on strong disinflation, or even deflation, forget that it could probably happen only when we see a recession. As Daniel Lacalle puts it, “either we have stagnation and elevated inflation, which means rates will remain higher for longer, or we have rate cuts due to a massive recession, which is not positive for stocks or bonds.”

Implications for Silver

What does it all mean for the silver (and gold) outlook for 2023? Well, silver has been in an upward trend since November 2022, as the chart below shows (courtesy of And it seems that this bullish move could continue later this year, even if we see some corrections on the way.

Why? Well, if the outlook has become more optimistic because of the recent slowdown in inflation rates, then it implies a less hawkish Fed. Moreover, if disinflation happens because of a recession or it is followed by a recession, then the Fed could become even more dovish, which should support the precious metals. And we could also see an increase in the safe-haven demand for gold and silver.

Arkadiusz Sieron, PhD