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Forecasts Quarter 2 2022

Chief Economist
Portfolio Strategist

Global Economic Outlook

  • The invasion of Ukraine represents a shock for the global economy, with inflation forecasts revised sharply higher and central banks poised to quicken the pace of monetary policy tightening.

  • Policy normalization makes sense in this environment, but the aggressive tightening priced in the markets carries risks and threatens prospects for a soft landing.

Emerging Markets Outlook

  • Fortunes within the emerging markets universe continue to diverge amid reducing commonality in growth drivers. Severe recessions are in store for Russia and Ukraine, while oil producers are benefiting from a trade windfall.
  • Although EM central banks are further advanced in terms of policy tightening, rising commodity prices and their impact on food costs could pose social stability risks.

Global Capital Markets

  • Equity markets continue to look attractive despite recent weakness, but with elevated risk regimes and moderating macroeconomic influences, a more cautious stance is warranted.

  • Fixed income sectors sent increasingly mixed signals as Q1 progressed with high nominal GDP levels suggesting the rise in rate levels may not have exhausted itself yet while slowing PMI levels and elevated inflation point towards lower rates.

More on Market Outlooks