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Mapped: Unemployment Forecasts, by Country in 2023



Unemployment Forecasts for 2023

Mapped: Unemployment Forecasts, by Country in 2023

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As 2022 clearly illustrated, the global job market can surprise expectations.

So far, this year is no different. The unemployment rate in six of the G7 countries hovers near the lowest in a century. With an unemployment rate of 3.4%, the U.S. jobless rate hasn’t fallen this low since 1969.

But as some economies navigate a strong labor market against high inflation and hawkish monetary policy, others are facing more challenging conditions. In the above graphic, we map unemployment forecasts in 2023 using data from the IMF’s World Economic Outlook.

Uncertainty Clouds the Surface

Across many countries, the pandemic has made entrenched labor trends worse. It has also altered job market conditions.

South Africa is projected to see the highest jobless rate globally. As the most industrialized nation on the continent, unemployment is estimated to hit 35.6% in 2023. Together, slow economic growth and stringent labor laws have prevented firms from hiring workers. Over the last two decades, unemployment has hovered around 20%.

Country / Region2023 Unemployment Rate(Projected)
🇿🇦 South Africa35.6%
🇸🇩 Sudan30.6%
🇵🇸 West Bank and Gaza25.0%
🇬🇪 Georgia19.5%
🇧🇦 Bosnia and Herzegovina17.2%
🇦🇲 Armenia15.1%
🇲🇰 North Macedonia15.0%
🇨🇷 Costa Rica13.2%
🇧🇸 The Bahamas12.7%
🇪🇸 Spain12.3%
🇬🇷 Greece12.2%
🇨🇴 Colombia11.1%
🇲🇦 Morocco10.7%
🇸🇷 Suriname10.6%
🇹🇷 Turkiye10.5%
🇧🇧 Barbados10.0%
🇦🇱 Albania10.0%
🇵🇦 Panama10.0%
🇷🇸 Serbia9.7%
🇮🇷 Iran9.6%
🇺🇿 Uzbekistan9.5%
🇧🇷 Brazil9.5%
🇮🇹 Italy9.4%
🇰🇬 Kyrgyz Republic9.0%
🇨🇻 Cabo Verde8.5%
🇨🇱 Chile8.3%
🇧🇿 Belize8.0%
🇵🇷 Puerto Rico7.9%
🇺🇾 Uruguay7.9%
🇦🇼 Aruba7.7%
🇫🇷 France7.6%
🇵🇪 Peru7.5%
🇸🇻 El Salvador7.5%
🇸🇪 Sweden7.4%
🇫🇮 Finland7.4%
🇲🇺 Mauritius7.4%
🇪🇬 Egypt7.3%
🇱🇻 Latvia7.2%
🇳🇮 Nicaragua7.2%
🇱🇹 Lithuania7.0%
🇦🇷 Argentina6.9%
🇪🇪 Estonia6.8%
🇧🇳 Brunei Darussalam6.8%
🇲🇳 Mongolia6.6%
🇭🇷 Croatia6.6%
🇨🇾 Cyprus6.5%
🇵🇹 Portugal6.5%
🇵🇰 Pakistan6.4%
🇵🇾 Paraguay6.4%
🇸🇰 Slovak Republic6.2%
🇩🇴 Dominican Republic6.2%
🇨🇦 Canada5.9%
🇦🇿 Azerbaijan5.8%
🇸🇲 San Marino5.7%
🇧🇪 Belgium5.6%
🇷🇴 Romania5.5%
🇫🇯 Fiji5.5%
🇵🇭 Philippines5.4%
🇮🇩 Indonesia5.3%
🇩🇰 Denmark5.3%
🇱🇰 Sri Lanka5.0%
🇱🇺 Luxembourg5.0%
🇮🇪 Ireland4.8%
🇰🇿 Kazakhstan4.8%
🇬🇧 United Kingdom4.8%
🇧🇬 Bulgaria4.7%
🇦🇹 Austria4.6%
🇭🇳 Honduras4.6%
🇺🇸 U.S.4.6%
🇧🇭 Bahrain4.4%
🇷🇺 Russia4.3%
🇧🇾 Belarus4.3%
🇸🇮 Slovenia4.3%
🇲🇾 Malaysia4.3%
🇨🇳 China4.1%
🇮🇸 Iceland4.0%
🇧🇴 Bolivia4.0%
🇭🇰 Hong Kong SAR4.0%
🇳🇱 Netherlands3.9%
🇳🇿 New Zealand3.9%
🇭🇺 Hungary3.8%
🇳🇴 Norway3.8%
🇮🇱 Israel3.8%
🇪🇨 Ecuador3.8%
🇦🇺 Australia3.7%
🇲🇽 Mexico3.7%
🇹🇼 Taiwan 3.6%
🇲🇩 Moldova3.5%
🇰🇷 South Korea3.4%
🇩🇪 Germany3.4%
🇲🇹 Malta3.3%
🇵🇱 Poland3.2%
🇸🇨 Seychelles
🇲🇴 Macao SAR2.7%
🇯🇵 Japan2.4%
🇨🇭 Switzerland2.4%
🇻🇳 Vietnam2.3%
🇨🇿 Czech Republic2.3%
🇸🇬 Singapore2.1%
🇹🇭 Thailand 1.0%

In Europe, Bosnia and Herzegovina is estimated to see the highest unemployment rate, at over 17%. It is followed by North Macedonia (15.0%) and Spain (12.7%). These jobless rates are more than double the projections for advanced economies in Europe.

The U.S. is forecast to see an unemployment rate of 4.6%, or 1.2% higher than current levels.

This suggests that today’s labor market strength will ease as U.S. economic indicators weaken. One marker is the Conference Board’s Leading Economic Index, which fell for its tenth straight month in December. Lower manufacturing orders, declining consumer expectations, and shorter work weeks are among the indicators it tracks.

Like the U.S., many advanced countries are witnessing labor market strength, especially in the United Kingdom, Asia, and Europe, although how long it will last is unknown.

A Closer Look at U.S. Numbers

Unlike some declining economic indicators mentioned above, the job market is one of the strongest areas of the global economy. Even as the tech sector reports mass layoffs, unemployment claims in the U.S. fall below recent averages. (It’s worth noting the tech sector makes up just 4% of the workforce).

In 2022, 4.8 million jobs were added, more than double the average seen between 2015-2019. Of course, the pandemic recovery has impacted these figures.

Some analysts suggest that despite a bleaker economic outlook, companies are hesitant to conduct layoffs. At the same time, the labor market is absorbing workers who have lost employment.

Consider the manufacturing sector. Even as the January ISM Purchasing Managers Index posted lower readings, hitting 47.4—a level of 48.7 and below generally indicates a recession—factories are not laying off many workers. Instead, manufacturers are saying they are confident conditions will improve in the second half of the year.

Containing Aftershocks

Today, strong labor markets pose a key challenge for central bankers globally.

This is because the robust job market is contributing to high inflation numbers. Yet despite recent rate increases, the impact has yet to prompt major waves in unemployment. Typically, monetary policy moves like these takes about a year to take peak effect. To combat inflation, monetary policy has been shown to take over three or even four years.

The good news is that inflation can potentially be tamed by other means. Fixing supply-side dynamics, such as preventing supply shortages and improving transportation systems and infrastructure could cool inflation.

As investors closely watch economic data, rising unemployment could come on the heels of higher interest rates, but so far this has yet to unravel.

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What History Reveals About Interest Rate Cuts

How have previous cycles of interest rate cuts in the U.S. impacted the economy and financial markets?



Line chart showing the depth and duration of previous cycles of interest rate cuts.



The following content is sponsored by New York Life Investments

What History Reveals About Interest Rate Cuts

The Federal Reserve has overseen seven cycles of interest rate cuts, averaging 26 months and 6.35 percentage points (ppts) each.

We’ve partnered with New York Life Investments to examine the impact of interest rate cut cycles on the economy and on the performance of financial assets in the U.S. to help keep investors informed. 

A Brief History of Interest Rate Cuts

Interest rates are a powerful tool that the central bank can use to spur economic activity. 

Typically, when the economy experiences a slowdown or a recession, the Federal Reserve will respond by cutting interest rates. As a result, each of the previous seven rate cut cycles—shown in the table below—occurred during or around U.S. recessions, according to data from the Federal Reserve. 

Interest Rate Cut CycleMagnitude (ppts)
July 2019–April 2020-2.4
July 2007–December 2008-5.1
November 2000–July 2003-5.5
May 1989–December 1992-6.9
August 1984–October 1986-5.8
July 1981–February 1983-10.5
July 1974–January 1977-8.3

Source: Federal Reserve 07/03/2024

Understanding past economic and financial impacts of interest rate cuts can help investors prepare for future monetary policy changes.

The Economic Response: Inflation

During past cycles, data from the Federal Reserve, shows that, on average, the inflation rate continued to decline throughout (-3.4 percentage points), largely due to the lagged effects of a slower economy that normally precedes interest rate declines. 

CycleStart to end change (ppts)End to one year later (ppts)
July 2019–April 2020-1.5+3.8
July 2007–December 2008-2.3+2.6
November 2000–July 2003-1.3+0.9
May 1989–December 1992-2.5-0.2
August 1984–October 1986-2.8+3.1
July 1981–February 1983-7.3+1.1
July 1974–January 1977-6.3+1.6

Source: Federal Reserve 07/03/2024. Based on the effective federal funds rate. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992, 1984-1986, 1981-1983, 1974-1977).

However, inflation played catch-up and rose by +1.9 percentage points one year after the final rate cut. With lower interest rates, consumers were incentivized to spend more and save less, which led to an uptick in the price of goods and services in six of the past seven cycles. 

The Economic Response: Real Consumer Spending Growth

Real consumer spending growth, as measured by the Bureau of Economic Analysis, typically reacted to rate cuts more quickly. 

On average, consumption growth rose slightly during the rate cut periods (+0.3 percentage points) and that increase accelerated one year later (+1.7 percentage points). 

CycleStart to end (ppts)End to one year later (ppts)
July 2019–April 2020-9.6+15.3
July 2007–December 2008-4.6+3.1
November 2000–July 2003+0.8-2.5
May 1989–December 1992+3.0-1.3
August 1984–October 1986+1.6-2.7
July 1981–February 1983+7.2-0.7
July 1974–January 1977+3.9+0.9

Source: BEA 07/03/2024. Quarterly data. Consumer spending growth is based on the percent change from the preceding quarter in real personal consumption expenditures, seasonally adjusted at annual rates. Percent changes at annual rates were then used to calculate the change in growth over rate cut cycles. Data from the last full quarter before the date in question was used for calculations. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992, 1984-1986, 1981-1983, 1974-1977).

The COVID-19 pandemic and the Global Financial Crisis were outliers. Spending continued to fall during the rate cut cycles but picked up one year later.

The Investment Response: Stocks, Bonds, and Real Estate

Historically, the trend in financial asset performance differed between stocks, bonds, and real estate both during and after interest rate declines.

Stocks and real estate posted negative returns during the cutting phases, with stocks taking the bigger hit. Conversely, bonds, a traditional safe haven, gained ground. 

AssetDuring (%)1 Quarter After (%)2 Quarters After (%)4 Quarters After (%)
Real Estate-4.8+25.5+15.6+25.5

Source: Yahoo Finance, Federal Reserve, NAREIT 09/04/2024. The S&P 500 total return index was used to track performance of stocks. The ICE Corporate Bonds total return index was used to track the performance of bonds. The NAREIT All Equity REITs total return index was used to track the performance of real estate. Calculations are based on the previous four rate cut cycles (2019-2020, 2007-2008, 2000-2003, 1989-1992). It is not possible to invest directly in an index. Past performance is not indicative of future results. Index definitions can be found at the end of this piece.

However, in the quarters preceding the last rate cut, all three assets increased in value. One year later, real estate had the highest average performance, followed closely by stocks, with bonds coming in third.

What’s Next for Interest Rates

In March 2024, the Federal Reserve released its Summary of Economic Projections outlining its expectation that U.S. interest rates will fall steadily in 2024 and beyond.

YearRange (%)Median (%)
Longer run2.50-2.752.625

Source: Federal Reserve 20/03/2024

Though the timing of interest rate cuts is uncertain, being armed with the knowledge of their impact on the economy and financial markets can provide valuable insight to investors. 

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