The troika of potential monetary policy changes, China's reopening, and recession angst could be critical to investment decision-making in 2023. Across some key markets, a second recession in three years appears likely, given the composite effects of demand-stifling strategies to stem inflation worries engineered by supply-side triggers. Having fanned the prevalent recession risks vis-à-vis rate hikes, global central banks remain unlikely to orchestrate rate cuts hurriedly. To this end, this report posits a more gradual temperance in the pace of interest rate increases or cessation of rate hikes in the second half of 2023, with support accruing from high-base effects and moderating supply -side issues. Elsewhere, the reopening of the Chinese economy portends a double-edged sword—raising hopes for brighter supply chain dynamics while potentially capping the scope for energy price moderation. Yet, it is likely to have a net-positive effect on the global economic outlook, with a knock-on effect on the urgency to reduce rates.

For Nigeria, the growth outlook could be materially influenced by the sustained traction in tech-led services and an impending paradigm shift in the oil sector. To wit, the imminent onboarding of the Dangote Refinery could translate into a key upside risk, helping to unlock new policy frontiers and abate perennial FX woes. Nonetheless, the picture is beclouded by sociopolitical and policy uncertainties stoked by the coming February general elections. Would the emergent president seek to bite the bullet and make strategically important decisions despite the risks of near-term backlash? Or would he be swayed by the need to endear himself to the populace with unsustainable subsidies and other social interventions? Against this backdrop, this report assumes that 2023 will be mostly transitional and gradual, with strategic priorities of the new administration likely to be more pronounced in 2024.