Navigating the New Normal

Analyst:

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Over the summer months, the outlook for the global economy and financial markets has brightened. As such, we now see the global economy contracting by a smaller -3.9% this year, with global activity returning to its pre-virus level by the second half of next year, albeit with the major developed countries likely to take several more quarters to reach the same point. [more]

The clock is ticking

June 15, 2023

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Cassidy Ainsworth-Grace, Jim Reid, Marion Laboure

Analyst:

We have consistently argued over the last 2-3 years that the US is heading for its first genuine policy-led boom-bust cycle in at least four decades. The inflation we see was induced largely by expansive fiscal and monetary policy, and the aggressive rate hikes needed to tame that have now materialised. Avoiding a hard landing would be historically unprecedented. [more]

The Taps Still Tightening

February 10, 2023

Region:

Cassidy Ainsworth-Grace, Jim Reid, Marion Laboure

Analyst:

After a succession of forecast downgrades, the global economy has turned a corner since the end of last year. For instance, natural gas prices in Europe have more than halved over the last couple of months, and we no longer expect an imminent Euro Area recession. In the meantime, China’s post-Covid reopening has proceeded faster than many thought possible, leading to similar upgrades in our forecasts. Even in the US, where we continue to call for a recession in H2, unemployment has reached a 53-year low. [more]

The Looming Recession

December 8, 2022

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Cassidy Ainsworth-Grace, Henry Allen, Jim Reid, Marion Laboure

Analyst:

The global outlook is moving in a stagflationary direction.
— Inflation momentum has continued to build, leading to central bank tightening that will slow growth across the key economies.
— Russia’s invasion of Ukraine has disrupted key
commodity markets and supply chains [more]

Shipwrecked

September 29, 2022

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Since our last House View in June, the economic and market outlook has deteriorated dramatically. We are in the midst of a historic bursting of the bond bubble, and a once-in-a-generation equity revaluation, combined with a sustained flight into the USD. The latter has been driven by geopolitical consideration as well as the failure of the ECB and the BoE to act as decisively on inflation as the Fed. Our street-leading prediction of a US recession by end-2023 has become increasingly mainstream, and we also expect the Euro Area and German economy to contract by at least -2% and -3% respectively next year. [more]

The gathering storm

June 24, 2022

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The global outlook is moving in a stagflationary direction. Inflation momentum has continued to build, leading to central bank tightening that will slow growth across the key economies. Russia’s invasion of Ukraine has disrupted key commodity markets and supply chains. [more]

Prepare for a hard landing

April 22, 2022

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The storm clouds over the global economy have darkened dramatically. Russia’s invasion of Ukraine has led to fundamental questions about Europe’s dependence on Russian energy and the continent’s geopolitical stability. It has also significantly pushed up commodity prices, exacerbating above-target inflation, and creating a serious risk that longer-term expectations become unanchored. [more]

Navigating perilous waters

January 13, 2022

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As we arrive in 2022, there are plenty of storm clouds on the horizon to grapple with: inflation rates in the major economies remain well above target and well above what the forecasting community expected last year; aggregate demand remains elevated; global supply-chains are still clogged; the Covid-19 pandemic continues to fester; and the geopolitical climate is also darkening. The odds of an accident have risen and the likelihood of a soft landing in 2022 requires some favourable assumptions and a modicum of good luck. [more]

Barrelling back to stagflation?

November 11, 2021

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The short-term growth outlook has weakened amidst supply-chain issues and an energy shock that has boosted inflation. But there is still major fiscal support, whilst vaccines and other medicines will help against Covid.

If inflation proves even higher than anticipated, that could lead to tighter monetary policy that knocks growth off course. [more]

The New World: Moving Beyond Covid

September 9, 2021

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The global economy performed strongly over the summer, but the delta variant has led to increasingly frequent data misses versus expectations. This has seen us downgrade our near-term US growth outlook just as high inflation readings have shifted attention to when central banks will taper asset purchases. These inflation fears initially centred on the US, but the Euro Area now has its highest inflation in almost a decade as well. For now investors are still convinced, as is priced in, that inflation will be a temporary phenomenon that will mostly self-correct. [more]

Reopening the Global Economy

July 7, 2021

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Recent weeks have seen the global recovery motor along as expected, supported by the vaccine rollouts and a further easing of restrictions. However, since our last House View in May, the balance of risks is slightly more negative given the continued global reach of the delta variant and the reaction to the FOMC. [more]

Vaccinating the global economy

May 25, 2021

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Since our last House View publication in March, our overall view of the global economy remains broadly the same. An end to the lockdowns in the US and Europe should be conducive to strong growth in the months ahead, while central banks are still expected to remain on the sidelinesfor now as they seek more clarity on the outlook. [more]

A new chapter for the global economy

March 25, 2021

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