Global Economic Forecasts: Q2 2022

May 2022

The global economic outlook has worsened substantially since February 2022, with lower expected growth and higher uncertainty. The war in Ukraine and economic sanctions on Russia have caused large reductions in Russian energy and commodity supplies, and major cuts in food exports from Russia and Ukraine. The war in Ukraine has also raised geopolitical risk especially in Europe, due to the risks of escalation of the war to a more general conflict.

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Key findings

Global Outlook

The war in Ukraine and economic sanctions on Russia have caused large reductions in Russian energy and commodity supplies, and major cuts in food exports from Russia and Ukraine. The new adverse supply shocks have led to significant price increases for energy and food, and declining global consumer purchasing power, especially for lower-income households.

Global Outlook

The war in Ukraine has also raised geopolitical risk especially in Europe, due to the risks of escalation of the war to a more general conflict. As a result, private sector uncertainty has increased and financial risk premia are likely to increase over 2022-2023, further reducing consumer spending and business investment.

China

China’s economy in Q2 2022 faces a significant slowdown in growth, with high uncertainty. Negative effects of COVID-19 restrictions, excess debt and profitability problems in China’s large real estate sector and the worsening global export demand outlook are the key factors underlying the slowdown in China’s economic growth in 2022-2023.

Scope
Key findings
Global baseline outlook: Ukraine war spill-overs reduce economic growth and raise inflation
Major commodity supply shocks have worsened inflation outlook
Above trend global inflation expected to continue in 2022-2024 amid rising interest rates
Pandemic impacts on global economy continue to moderate outside China
Downside risks have increased substantially
Real GDP annual growth forecasts and revisions from last quarter: AE
Real GDP annual growth forecasts and revisions from last quarter: EMDE
Inflation forecasts
Central bank interest rates quarterly forecasts
Global risk map: Rising global stagflation risk
Global Risk Index scores and rankings
Global stagflation: Main global risk
COVID-19 pessimistic scenario: Worsening pandemic remains a risk
COVID-19 optimistic scenario: A faster global recovery possible but unlikely
US: Negative supply shocks and low consumer confidence worsen economic outlook
US: Forecast risks
US: Inflation may have peaked but is expected to remain high in 2022-2023
US: Consumer confidence is low despite strong labour market
China: Tighter coronavirus restrictions and lower global export demand worsen outlook
China: Forecast risks
China: Gap between consumer and producer price inflation a sign of low demand conditions
China: Economic activity likely declined in recent months
India: General outlook
India: Forecast risks
Japan: General outlook
Japan: Forecast risks
Indonesia: Economic volatility rises in Q2 as the recovery faces mounting obstacles
Eurozone: Worsening outlook and increasing uncertainty after start of war in Ukraine
Eurozone: Forecast risks
Eurozone: Inflation rises to unprecedented levels
Eurozone: Private sector confidence has declined though still above historic average
UK: General outlook
UK: Forecast risks
Russia: General outlook
Russia: Forecast risks
Brazil: General outlook
Brazil: Forecast risks
Mexico: Global economic disruption significantly slows Mexico’s recovery in Q2
Summary 1 baseline scenario and main downside risks: Q2 2022
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