What's on the horizon for the global economy?

Our weekly updated overview highlights the key releases of global economic market data from around the globe and provides an economic outlook for the rest of 2022 by region.

  • Our Week Ahead podcast explores the main themes that will drive global markets over the coming week
  • Our Global Economic Markets Data Calendar shows upcoming events happening over the week
  • We also provide an outlook overview region by region for the rest of the year
Global Markets Data Calendar

Our view in a nutshell

Japan

  • The post-pandemic resumption of economic activity in Japan will soften the impact of a recession expected in the US.
  • Current 3% core CPI inflation should not last long, peaking in December 2022 to reach around 0% in 2024.
  • We don’t think the BOJ expects the price stability target to be realized, keeping current monetary policy intact through 2023.
  • Downside risks abound, especially in the middle of H1 2023, on expected US and euro area recessions and slowing growth in China.

Asia

  • Reopening is a near-term growth offset, but a synchronized global growth downturn will short circuit Asia’s recovery.
  • We expect the export downturn to deepen, tighter financial conditions to weigh on capex and see a mixed outlook on consumption.
  • Higher commodity prices should benefit Malaysia and Indonesia, but Thailand, India and the Philippines are relative losers.
  • Headline CPI inflation should moderate from Q4, though core CPI is likely to rise further
  • We expect further monetary policy tightening in the region, but now expect a lower terminal policy rate and rate cuts in H2 2023.
  • Korea: Rising credit stress has increased the probability of an early end to the BOK’s hiking cycle; we expect a terminal rate of 3.5%.
  • India: Policy focus to gradually shift from inflation to growth, implying terminal rates are closer.
  • Indonesia: The central bank is falling behind the curve with inflation now above target, adding to FX stability risks.
  • Australia: We expect a slide into recession from Q1 2023, as rate hikes bite. As inflation cools, we forecast rate cuts in Q4 2023.

China

  • Despite Beijing’s efforts to fine-tune ZCS and reverse most curbs on property financing, we expect near-term growth to worsen.
  • Covid cases could surge further on colder weather and fine-tuning measures, which may prompt further lockdowns from local officials.
  • We see no reliable solution to reboot housing demand on the horizon, while export growth may drop further on weaker global growth.
  • We expect a slow, painful and bumpy reopening after March 2023, with pent-up demand settling below pre-Covid levels.

United States

  • With growth momentum rapidly decelerating, we expect a recession to begin in Q4 2022.
  • We expect additional hikes of 50bp in December, February and March along with 25bp in May to a 5.50-5.75% terminal rate.
  • After holding rates at a restrictive level, 25bp cuts are likely in September 2023, accelerating to 50bp/meeting in Q2 2024.
  • Near-term labor market strength may persist, but we expect job losses in Q1 2023 and a 6.4% unemployment rate by end-2024.
  • Inflation will likely remain elevated before moderating more notably in 2023; we see balanced risk around our forecast.
  • High inflation and divided government will likely prevent policy support from both monetary and fiscal authorities.
  • Notable risks include unanchored inflation expectations and corporate debt market stress.

Europe

  • The euro area is highly exposed to surging energy prices, so we see a recession from Q4 2022 until end-2023 (GDP: -2.5%).
  • Despite expectations for easing global price pressures, euro area inflation should remain well-above target for some time.
  • We maintain our forecast of 75bp in December, 50bp in February and three final 25bp hikes up to June 2023 (3.50% peak).
  • The UK is less exposed to Russia/Ukraine than the euro area, but still we see a recession as unavoidable (GDP: -2%).
  • While the Energy Price Guarantee will limit inflation, we see further modest rises in inflation before a meaningful fall in 2023.
  • After the BoE’s 75bp November hike, we see a further 75bp hike in Dec, 50bp in Feb and a final 25bp in Mar (4.50% peak).

For more information read our weekly report here

Contributor

    Aichi Amemiya

    Aichi Amemiya

    Senior US Economist

    George Buckley

    George Buckley

    Chief UK & Euro Area Economist

    Ting Lu

    Ting Lu

    Chief China Economist

    Kyohei Morita

    Kyohei Morita

    Chief Economist, Japan

    Rob Subbaraman

    Rob Subbaraman

    Head of Global Macro Research

    Sonal Varma

    Sonal Varma

    Chief Economist, India and Asia ex-Japan

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