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Economic fundamentals a bigger 2023 concern for markets than rate shocks: GIC

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Raphael Lim

Raphael Lim

Published Thu, Dec 8, 2022 · 04:38 PM
    • GIC’s chief economist Prakash Kannan believes that inflation is likely to be persistent, even though it may have peaked.
    • GIC’s chief economist Prakash Kannan believes that inflation is likely to be persistent, even though it may have peaked. PHOTO: GIC

    ECONOMIC fundamentals and liquidity shocks are a bigger concern for markets than rapidly rising interest rates in 2023, according to GIC’s chief economist Prakash Kannan.

     “Our view is roughly on the interest rate shock, you’re probably about 85, or 90 per cent done, and this is with regard to both what’s priced into the market, but also in relation to where we see inflation dynamics,” he said during the Official Monetary and Financial Institutions Forum (OMFIF) Asia Forum on Thursday (Dec 8).

    However, he added that they are still cautious as interest rates are just one of three categories of shocks in the markets. The other two shocks – involving the real economy and liquidity – have yet to fully play out. 

    GICInterest ratesRecession

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