In the newly released Big Picture analysis,
However, the downturn will not necessarily be very deep nor pro-longed.
The global economy has been hit by a series of challenges in 2022:
'Not all regions of the world experience the same headwinds as they are driven by different undercurrents, but what they have in common is that they are putting pressure on consumers and businesses,' says
The perfect storm in
The euro area is facing the perfect storm and will likely be the first region to slip into recession this winter. Delayed effects from the
'A crisis is not only a challenge, but also an opportunity. Countries like
Three highlights from The Big Picture
Inflation remains at elevated levels, but is expected to ease
Headwinds in
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A gradual recovery for the US economy
In contrast to the euro area, the US is experiencing a more 'traditional' recession triggered by policy tightening in 2023. But without the same structural energy headwinds that are constraining
In
'
'Once China leaves it's zero-Covid policy behind, which we expect in the second half of 2023, pent-up demand could be unleashed and support growth in 2024. Nevertheless, the US-China rivalry, especially on tech, continues to cast a shadow on the Chinese economy.'
Inflation will drop, but...
Inflation has been on everybody's lips this year and in 2023, the inflation pressure is expected to ease, but remains at elevated levels. Many of the initial inflationary drivers - like supply constraints, high shipping and raw material costs - have started to normalise, pointing to significant global deflationary pressures going forward. The good news in this context is that falling inflation increasingly allows central banks to exit their hiking mode and rate cuts could even be on the agenda for 2024.
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