Skip to main content

Paying the price of high inflation

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. Global Outlook Drop-In (4th May, 10:00 ET/15:00 BST): Jennifer McKeown and Simon MacAdam from our Global Economics team will be discussing key takeaways from this report and answering your questions in a 20-minute briefing next Wednesday. Register now.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access