Weak consumer confidence and renewed supply risks

World GDP appears to have expanded at a below-trend pace in Q1 as high inflation limited real consumer spending and supply shortages and Omicron waves continued to disrupt activity. March’s broad-based drop in consumer confidence suggests that consumer spending growth is likely to weaken further. Encouragingly, our G7 Shortages Indicators showed further signs of improvement in March and we expect shortages to alleviate as the year goes on. But there are downside risks in the near term. Firms in central Europe and the euro-zone have reported lengthening delivery times since the start of the war in Ukraine. Meanwhile, the 25% fall in road freight flows in China in the past two weeks highlights the risks that virus containment efforts there may yet disrupt global economic activity.