The economy in retrospect

Little certainty

Global economic growth prospects are getting gloomier. It seems the question of ‘will there be a recession’ has shifted to ‘how severe will the recession be’. In Europe this growing pessimism is largely caused by the war in Ukraine, which is creating international and political uncertainty and causing restraint among businesses and consumers. The United States seems to be faring slightly better. In the US the jobless rate is low, wages are rising and consumer spending is still increasing. Nevertheless, the growth outlook for the US has deteriorated as well. Finally, China’s economy is cooling due to property market woes and China’s zero COVID policy. This poses a risk to the global economy.

High, higher, highest

It is clear by now that in most developed countries inflation has been going up more rapidly and will remain elevated for longer than most economists, investors and central banks had initially anticipated at the beginning of this year. In the US we are seeing the first signs that inflation is levelling off. But not so in the eurozone, as many of the drivers of high inflation are still here – disruption of oil and gas supplies from Russia, rising product prices and international supply chain disruptions.