During May:

• Global growth has slowed sharply and the risk of financial stress in emerging market and developing economies is intensifying amid elevated global interest rates, according to the World Bank’s latest Global Economic Prospects report.
• After growing 3.1% last year, the global economy is set to slow substantially in 2023, to 2.1%, amid continued monetary policy tightening to rein in high inflation, before a tepid recovery in 2024, to 2.4%.
• The latest forecasts show the enduring effect of the overlapping shocks of the pandemic, the Russian invasion of Ukraine, and the sharp economic slowdown amid tight global financial conditions.
• Share market performance in May was mixed. The S&P 500 rose by 0.25%, while the Australian S&P 200 fell by 2.98%.
• Global shares ex-Australia produced a reasonable return of 1.2%. A key driver of this was a depreciation in the AUD versus the USD over the month, making U.S. shares more valuable to Australian investors.
• In Australia, Small Caps and Growth were the best performing styles for the month, albeit they were negative. Globally, Growth and Quality were the best performing styles and were the only two styles to produce positive returns during May.
• Within Fixed income markets, both Australian government bonds and credit lost ground this month. The main Australian fixed interest index, the Bloomberg AusBond Composite 0+ Years Index was down 1.2%, while the Bloomberg AusBond Credit 0+ Years Index fell 0.5%.
• Global High Yield bonds, as measured by the Bloomberg Barclays Global High Yield Total Return Index Hedged into AUD lost 0.6% for the month of May.

Read more in the Monthly Economic Wrap here.