As a result, our growth forecasts remain below the consensus (Exhibit 1).Įxhibit 1: Weighted average consensus real GDP Taking all of these factors into consideration, our expectation is that global growth will continue to moderate somewhat. mid-term elections that could change the balance of power between the two main political parties. Other challenges include tensions between Russia and Ukraine and, later this year, U.S. That is particularly the case in China, where growth is already slowing and where a zero-tolerance policy for COVID-19 has been adopted ahead of the 2022 Winter Olympics. The virus remains a cause for concern, and although there are signs that new cases may be peaking, restrictions can still weigh on economies. In addition to monetary-policy uncertainty, several other risks are worth monitoring. Financial markets have been especially volatile so far this year as investors adjust their expectations for a faster round of tightening than was previously expected. With this shift comes the delicate balance of tightening to a degree that preserves the economic expansion without sending the economy into recession. Perhaps more importantly for central banks, inflation is running hot and they have been forced to shift from being spectators of inflation to activists leading the fight against it. Demand for goods and services is strong and labour markets are tight. Nearly two years after the pandemic began, the economy has undergone significant healing and the extraordinary stimulus that was put in place to support businesses and individuals during the initial stages of the crisis is no longer required.
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