Insider Monkey

Diversified Stock Portfolio: 10 Sector ETFs and International ETFs to Buy

Hamna Asim
13 min read

In This Article:

In this article, we discuss 10 sector and international ETFs to buy. If you want to skip our detailed discussion on the international stock market, head directly to Diversified Stock Portfolio: 5 Sector ETFs and International ETFs to Buy.

As per a PwC report from early 2023, the global economy is predicted to expand by 1.6% during the year. This growth is primarily due to China reopening its economy after a prolonged period of lockdowns, alongside robust anticipated growth in India and other emerging economies. In the case of the United States, following a strong performance in 2022, it is expected to escape a recession in 2023, with the firm forecasting a GDP growth rate of just 0.2% for the world's largest economy. However, there are expectations of slight economic decline in the UK and some major European Union countries like Germany and Italy. After the world's largest central banks increased interest rates multiple times in 2022 and global demand slowed down as a result, it is anticipated that inflation will decrease during 2023. This decrease in prices of goods is expected to contribute to lower inflation rates in economies all over the world.

Due to supply chain challenges and geopolitical tensions, many companies are diversifying their supply sources, as noted by Deloitte. This diversification is expected to persist, leading to more capital leaving China and increased investments in other regions like Southeast Asia, India, Central Europe, and Mexico. Dr. Ira Kalish, Chief Global Economist at Deloitte stated:

“Despite tightness in the labor market, wages have failed to keep pace with inflation in most advanced economies. The result has been weaker consumer spending. In 2023, as inflation recedes, it is likely that wage growth will ultimately exceed inflation. This will boost consumer spending.”

According to Deloitte, Japan’s economy is likely to stabilize. The Japanese yen received a boost as the Bank of Japan made some changes to its monetary policy. On the other hand, India is relatively safer from the energy shock since it imports inexpensive oil from Russia, and its trade as a percentage of GDP is lower than many other countries. This shields India from some of the adverse effects of a global economic slowdown. Although inflation in India has been relatively high, it has recently started to decline.

J.P. Morgan reported that the global economy picked up speed in the first half of 2023, reaching a growth rate of 2.8%. So far, the impact of monetary tightening has been balanced out by the diminishing supply disruptions caused by the COVID-19 pandemic and Russia's Ukraine invasion. However, there is an expectation of more tightening measures in developed markets before the end of 2023 to control inflation. Unfortunately, additional tightening may have adverse effects on the private sector's health. J.P. Morgan Research predicts that the U.S. could experience a mild recession towards the end of 2023 due to the Federal Reserve's restrictive policies, which would lead to tighter credit conditions and gradual decline in growth. In Western Europe, high energy prices weighed down the economy during the fourth quarter of 2022, with some relief in the first quarter of 2023, although GDP growth remained slow. The economic outlook for the rest of the year is a growth rate of 1.5–2%.

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