The global economy is slowing as inflation, higher interest rates and tightening financial conditions increasingly affect demand.
As a result, earnings are under pressure, which will affect earnings growth when the time comes.
It should be added that dividends experience much less volatility than earnings throughout the cycle, so any slowdown or decline in earnings will have a moderating effect on payouts over the next year or so.
Also, after a few solid years, the easy wins from the post-pandemic recovery have already come. thus, Earnings growth in 2023 will be significantly slower than in the past two years.
However, the post-pandemic recovery is still being felt in the European banking sector, as quibbles around the removal of dividend restrictions during the Covid period have delayed recovery in some parts of the sector. This will be evident in the strong numbers Europe will post in the second quarter.
Furthermore, as nearly all of Europe’s single annual dividend payment reflects a good dividend performance in 2022, we continue to see significant increases in a number of segments as the second quarter progresses.
From a sectoral standpoint, for the remainder of 2023, we’ve paid a dividend Mining sector It will exert the greatest drag on global earnings growth, hitting Australia, emerging markets and the UK in particular. On the contrary, the distributions banking and oil sectors Keep contributing.
The exceptionally high number of extraordinary dividends recorded in the first quarter, combined with a strong second quarter in Europe, are key reasons for our improved outlook for 2023.
Currently, on Janus Henderson, we expect it to be Global profit growth of 5.2%, which means a record spending of $1.64 trillion. The underlying growth forecast was raised to 5.0% from the 3.4% expected three months ago.
Head of Global Equity Income at Janus Henderson.
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