Investment bank UBS has identified global stocks to buy in what could be a year of “slowflation” — its term for the combination of sluggish growth and sky-high inflation. The Swiss bank’s strategists said they expect global growth to be a weak 2.6% in 2023, below the 50-year average of 3.5%. They added that progress on bringing core inflation nearer to central bank targets has been slower than expected. Latest headline inflation figures show that euro zone inflation dropped to 6.9% in March — down from 8.5% in February. However, the U.K. unexpectedly reported double-digit inflation figures in March as households grappled with soaring food and energy bills. UBS strategists referred to this state of slow economic growth coupled with moderately high inflation as “slowflation” in a note to clients on April 18. “The prospect of 2023 being a year of Slowflation, which we define as a state of slow … economic growth coupled with moderately high … inflation, is rising,” said UBS strategists led by Nicolas Le Roux. After analyzing market history for patterns common to past periods of slowflation, the bank named a handful of stocks that could beat the market under similar conditions. The table below shows 10 stocks in the Stoxx Europe 600 index with the highest composite score assigned by UBS. UBS strategists identified seven distinct periods of slowflation in the U.S. since 1970, lasting an average of 12 months each on average. In Europe, there were five periods identified over the same period. The bank said subdued inflation between 1985 and 2022 explained the smaller count on the continent compared with North America. UBS identified stocks likely to outperform under these conditions, taking into account historical lessons learned, current earnings momentum and valuations, and the views of their stock analysts. The list includes sectors most favored by European investors, such as energy, utilities, consumer staples and health-care stocks. On the other hand, information technology and communication services performed poorly, according to their analysis. UBS said banks rank best among financials, while retail scored well across all regions except Europe. According to the strategists, the automotive sector was a surprising inclusion in the European list.