ECONOMIC AND MARKET OVERVIEW
From inflation to recession. This was a dominant theme in macro economic analysis in July.
Inflation in most developed markets has likely peaked and attention has now shifted to the likelihood of recessions occurring in the major economies around the world Global economic growth in a post Covid 19 world has already been reined in with interest rate increases by almost every central bank. As debt servicing costs (for the public and private sector alike) are soaring, so economic activity seems to slow down.
In a recent update to their Global Economic Outlook, the International Monetary Fund (IMF) reported that a tentative recovery in 2021 has been followed by increasingly gloomy developments in 2022 as risks began to materialize. Global output contracted in the second quarter of this year, owing to downturns in China and Russia, while consumer spending in the United States undershot expectations. Several shocks have hit a world economy already weakened by the pandemic: higher than expected inflation worldwide – especially in the United States and major European economies – triggering tighter financial conditions; a worse than anticipated slowdown in China, reflecting COVID 19 outbreaks and lockdowns; and further negative spillovers from the war in Ukraine.
