We have revised our forecast for world growth this year to further below the consensus to reflect the growing ill effects of high inflation. While inflation should ease as the year goes on, the drag on real incomes will hit spending in the meantime. The war in Ukraine will weigh on sentiment and add to supply shortages, particularly in Europe where some economies will dip into recession. And as central bankers focus on stemming inflation rather than supporting activity, aggressive policy tightening will add to the economic headwinds. While policy will be loosened in China, this will not offset the effects a weak property sector, slowing exports and renewed lockdowns there, which pose downside risks to activity in the rest of the world.
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