Renewed restrictions: inflationary or disinflationary?

If Omicron turns out to be malign enough to prompt tighter restrictions, we suspect that the net result would initially be for inflation to be lower than otherwise. But by worsening product and potentially labour shortages, restrictions on household activity could end up keeping inflation above targets for longer.
Simon MacAdam Senior Global Economist
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Global Trade Monitor

Trade rebound chimes with better news on supply chains

After gradually trending lower for much of last year, November marked the second consecutive month of strong growth in world trade, which reached a new record high. This adds to evidence that some product shortages began to ease towards the end of 2021. Even so, it will be well into 2022 at least before shipping bottlenecks improve materially. In the meantime, freight rates are likely to remain elevated.

26 January 2022

Global Economic Outlook

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.

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Global Economics Update

PMIs: Omicron hit worse in the US than other DMs

The Flash PMIs for January suggest that Omicron has dealt a big blow to both industry and services sectors in the US in recent weeks, while other DMs have got off more lightly. But with new cases falling in several DMs, we think the economic hit will prove short-lived and will be mostly made up for in the months ahead.

24 January 2022

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Global Economics Update

Global exposure to Turkey’s currency crisis

With the Turkish lira down by 9% so far today and 20% over the past week, the currency is now firmly in crisis territory. Higher inflation and tighter domestic financial conditions are likely to sap Turkey’s recovery. But given the small trade and financial links with the rest of the world, and that most EM external positions are in better shape than in the past, there are unlikely to be significant global spillovers. Drop-In: Turkey's Currency Crisis - Mapping the Endgame 3pm GMT, Tuesday 23rd November 2021 Join Senior Emerging Markets Economist Shilan Shah and Jason Tuvey, who leads our Turkish coverage, for a discussion about this latest crisis, the extent of potential EM contagion and likely paths ahead.

23 November 2021

Global Economics Update

Latest inflation data less worrying for the ECB than the Fed

While inflation will stay well above target in both the US and Germany in the months ahead, the detail of the latest inflation prints seems to confirm that price pressures are likely to be much more persistent in the US.  Crucially, rents are becoming a significant source of inflation in the US, but not in Germany.

11 November 2021

Global Economics Update

PMIs: Still no sign of supply problems letting up

The October manufacturing PMIs gave us more of the same – evidence that supply disruptions are getting worse, industrial output growth is weakening, and price pressures are intensifying. This fits with our view that the world economy is in for a period of slower growth and higher inflation in the coming months.

2 November 2021
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