Despite its hawkish rhetoric the ECB cannot follow the Fed

Global inflation is at its highest level for decades, especially in advanced economies, with GDP growth  already slowing sharply. This is called stagflation, but the severity of the stagflation varies across countries.

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China’s growth outlook muddied by a plethora of uncertainties

China is a major source of uncertainty for the global growth outlook in 2022 and 2023. After a sudden collapse in demand and activity in Q1 2020, following the outbreak of Covid-19, China performed an impressive recovery from the pandemic. The positive momentum lasted from mid-2020 to mid-2021.

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Headwinds pose downside risks and lead to lower global growth

The dominant global macro theme for the last year and a half has been the economic recovery from the depths of the Covid-19 pandemic shock. In fact, with a GDP growth of 5.9% in 2021, the global economy witnessed the fastest expansion in activity in almost 50 years.

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Covid-19 is gradually becoming endemic, but risks remain

More than two years since Covid-19 was first discovered, China again appears to be the epicentre of the pandemic. At least that’s the take-away from recent headlines. However, focusing too much on China distracts us from the bigger global picture,

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Geopolitical disruptions spur the potential for an energy crisis in Europe

In early 2020, the spread of Covid-19 spurred the worst global recession since the immediate post Second World War. This year, with the start of the Russo-Ukrainian conflict, the world faces the most significant military event in Europe since the Second World War.

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Russo-Ukrainian conflict shocks commodity markets

The 2020s are proving to be a period turmoil with shocks and uncertainty. Just when the global economy was seemingly turning the page from the Covid-19 pandemic, another significant event is producing negative geopolitical and economic consequences:

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US Fed hiked rates and is set to double down on inflation control

The US Federal Reserve (Fed) is on the move. After several months managing the expectations of market participants about its future actions, the Fed enacted its first policy rate hike since 2016. In fact, during its Federal Open Market Committee (FOMC) meeting in March 16th 2022,

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ECB lift-off likely to be delayed by conflict in Ukraine

The unprecedented strength of fiscal and monetary stimulus in advanced economies led to a rapid recovery in 2021. However, growth is slowing in 2022 and inflationary pressures are already high and rising. Higher inflation and lower GDP growth is called stagflation and is one of the most challenging situations for central banks to face.

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The looming risks of global “stagflation”

Inflation and GDP growth are the two most powerful drivers in a modern economy. Although in different ways, they both affect all major decisions about when or where to consume and invest. An ideal macroeconomic environment would combine high growth with low inflation,

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Global debt has hit a record USD 296 trillion and may limit rate hikes

The global pandemic has caused the largest surge in debt since World War II. Indeed, according to the Institute of International Finance (IIF), global debt rose by 16% to USD 296 trillion between Q3 2019 and Q3 2021 (Chart 1),

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Last Update : Thursday 30 June 2022