April Global Macro Monthly - Macron encore

  • 27 April 2022 (7 min read)

Key points

  • The Ukraine war continues. Energy markets have been relatively cushioned, but commodity prices are elevated and supply-chain disruption has risen. This is an issue for European economies, but is impacting economies across the globe, with Asian central banks increasingly tightening
  • The worsening inflation outlook has seen central bank expectations re-price higher. In the US, markets now see rates at 2.75% by year-end and 3.25% next. We expect a marked growth deceleration to moderate expectations, but regional labour market developments will be critical.
  • China’s Covid outbreak adds to risks. China growth slowed markedly in March – before the Shanghai lockdown. We expect a fall in Q2 GDP and lower our full-year growth forecast. This suggests demand headwinds for the rest of the world, but also risks further supply disruption.
  • This is a toxic combination of factors and has led the International Monetary Fund to lower its global forecasts to 3.6% for 2022 and 2023. Our own outlook is for a weaker 3.0% and 2.9%.
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