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Mapped: Unemployment Forecasts, by Country in 2023

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Unemployment Forecast

Unemployment Forecast

Mapped: Unemployment Forecasts, by Country in 2023

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 / Region
2023 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%
🇸🇨 Seychelles3.0%
🇲🇴 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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Markets in a Minute

The Average American’s Financial Portfolio by Account Type

From retirement plans to bank accounts, we show the percentage of an American’s financial portfolio that is typically held in each account.

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The Average American’s Financial Portfolio by Account Type

Where does the average American put their money? From retirement plans to banks, the typical financial portfolio includes a variety of accounts.

In this graphic from Morningstar, we explore what percentage of a person’s money is typically held within each account.

Breaking Down a Typical Financial Portfolio

People put the most money in employer retirement plans, which make up nearly two-fifths of the average financial portfolio. Bank accounts, which include checking, savings, and CDs, hold the second-largest percentage of people’s money.

Account Type% of Financial Portfolio
Employer retirement plan38%
Bank account23%
Brokerage/investment account14%
Traditional IRA10%
Roth IRA7%
Crypto wallet/account4%
Education savings account3%
Other1%

Source: Morningstar Voice of the Investor Report 2024, based on 1,261 U.S. respondents.

Outside of employer retirement plans and bank accounts, the average American keeps nearly 40% of their money in accounts that advisors typically help manage. For instance, people also hold a large portion of their assets in investment accounts and IRAs.

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Account Insight for Advisors

Given the large focus on retirement accounts in financial portfolios, advisors can clearly communicate how they will help investors achieve their retirement goals. Notably, Americans say that funding retirement accounts is a top financial goal in the next three years (39% of people), second only to reducing debt (40%).

Americans also say that building an emergency fund is one of their financial goals (35%), which can be supported by the money they hold in bank accounts. However, it can be helpful for advisors to educate clients on the lower return potential of savings accounts and CDs. In comparison, advisors can highlight that investment or retirement accounts can hold assets with more potential for building wealth, like mutual funds or ETFs. With this knowledge in mind, clients will be better able to balance short-term and long-term financial goals.

The survey results also highlight the importance of advisors staying up to date on emerging trends and products. People hold 4% of their money in crypto accounts on average, and nearly a quarter of people said they hold crypto assets like bitcoin. Advisors who educate themselves on these assets can more effectively answer investors’ questions.

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5 Factors Linked to Higher Investor Engagement

Engaged investors review their goals often and are more involved in decisions, but which factors are tied to higher investor engagement?

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Partial bar chart showing the factors linked to higher investor engagement along with a picture of a man looking at a cell phone.

5 Factors Linked to Higher Investor Engagement

Imagine two investors. One investor reviews their investment goals every quarter and actively makes decisions. The second investor hasn’t reviewed their goals in over a year and doesn’t take part in any investment decisions. Are there traits that the first, more involved investor would be more likely to have?

In this graphic from Morningstar, we explore five factors that are associated with high investor engagement.

Influences on Investor Engagement

Morningstar scores their Investor Engagement Index from a low of zero to a high of 100, which indicates full engagement. In their survey, they discovered five traits that are tied to higher average engagement levels among investors.

FactorInvestor Engagement Index Score (Max = 100)
Financial advisor relationshipDon’t work with financial advisor: 63
Work with financial advisor: 70
Sustainability alignmentNo actions/alignment: 63
Some/full alignment: 74
Trust in AILow trust: 61
High trust: 74
Risk toleranceConservative: 62
Aggressive: 76
Comfort making investment decisionsLow comfort: 42
High comfort: 76

Morningstar’s Investor Engagement Index is equally weighted based on retail investors’ responses to seven questions: feeling informed about composition and performance of investments, frequency of investment portfolio review, involvement in investment decision-making, understanding of investment concepts and financial markets, frequency of goals review, clarity of investment strategy aligning to long-term goals, and frequency of engagement in financial education activities.

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On average, people who work with financial advisors, have sustainability alignment, trust AI, and have a high risk tolerance are more engaged.

The starkest contrast was that people with high comfort making investment decisions have engagement levels that are nearly two times higher than those with low comfort. In fact, people with a high comfort level were significantly more likely to say they were knowledgeable about the composition and performance of their investments (84%) vs. those with low comfort (18%).

Personalizing Experiences Based on Engagement

Advisors can consider adjusting their approach depending on an investor’s engagement level. For example, if a client has an aggressive risk tolerance this may indicate the client is more engaged. Based on this, the advisor could check if the client would prefer more frequent portfolio reviews.

On the other hand, soft skills can play a key role for those who are less engaged. People with low comfort making investment decisions indicated that the top ways their financial advisor provides value is through optimizing for growth and risk management (62%), making them feel more secure about their financial future (38%), and offering peace of mind and relief from the stress of money management (30%).

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