We warned at the start of the year that global growth would disappoint, while inflation would surprise to the upside in 2022 and recent events have added to those concerns. The surge in commodity prices related to the war in Ukraine means that headline inflation will be even higher than we previously expected around the world. The hit to real incomes and disruption to trade and energy supply has led us to revise down our GDP forecasts for some economies, particularly the rest of emerging Europe and the euro-zone. The war could also cause renewed supply shortages, with reports already emerging of shortages of wheat, vegetable oils, certain metals, and electronic components. What’s more, rising virus numbers and renewed restrictions in China threaten to make matters worse, all suggesting that previous signs of improvement in our G7 Shortages Indicators are unlikely to be sustained.
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