While economic activity was generally more resilient than feared in the first half of 2023, we expect global growth to disappoint in the coming quarters. We doubt that another bout of policy stimulus will radically improve the outlook for China’s economy, and growth in advanced economies should weaken as past rate hikes take effect, pushing several into recession. Weaker demand should in turn help drag down on inflation, which has already halved at the global level over the past year, albeit largely due to lower energy inflation. As North America has made more progress in dampening underlying inflation, central banks there will move to cut rates earlier than in Europe. Meanwhile, the EM easing cycle should broaden out as inflation continues to fall towards central bank targets.
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