November 10, 2022

The Forward View – Global: November 2022

Further monetary tightening to significantly slow growth in 2023.


  • Inflationary pressures are proving persistent –there was a slight uptick in consumer price growth in September to 9.0% yoy (following on from three months of stability at 8.7% yoy) –with a notable pickup in Eurozone prices (in part related to energy costs). Following the November FOMC meeting, the US Fed Chair noted that inflation had not come down as rapidly as expected –increasing the likelihood of further rate rises in coming months.
  • Major central banks have continued to lift policy rates –with both the US Federal Reserve and European Central Bank increasing rates by 75 basis points in early November and late October respectively. In the case of the Fed, it was the fourth 75 basis point increase in a row, and we anticipate an additional 100 basis points of increases over the next three meetings –bringing the fed funds rate to 5.0%. As inflation data are lagged, there is a risk that rates rise to levels above those necessary to curb inflation, resulting in deeper recessions in advanced economies.
  • Our forecast profile is largely unchanged –with a significant slowdown anticipated in 2023, down to 2.2% (from 2.3% previously), reflecting lower growth expectations for the UK, east Asia (ex. Japan & China) and Russia, before a partial recovery in 2024 to 2.8%. These rates of growth would still be well below the long run average of 3.4% (over the period from 1980 onwards).
  • China’s zero-COVID public health policies remain a key uncertainty for the global outlook. Rumours circulating on Chinese social media in early November suggested a committee had been formed to develop plans for a post-COVID-19 reopening –targeting March 2023 –however this has subsequently been countered by various officials, most notably China’s National Health Commission.
  • Risks related to the Russia-Ukraine conflict –particularly around energy and agricultural supplies from the region –also persist, while various geo-political tensions (most notably between the US and China) could also re-emerge.

For further details, please see The Forward View Global (November 2022)