Growth to disappoint, but rates will rise regardless

Global growth will be slower this year than last and we expect outturns in major economies including the US and China to be below consensus forecasts. The US economy will be hindered by persistent labour shortages and reduced policy support while China will suffer from a slowdown in export growth and further weakness in the construction sector. Headline inflation is very likely to fall, but we expect core inflation to remain elevated across the developed world as shortages persist and wage growth picks up. Accordingly, most central banks are set to raise interest rates, although China will be a notable exception.