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Economic research firm Capital Economics recently published a note outlining three key questions that are shaping the global economic outlook. These questions revolve around the post-COVID economy, Europe’s economic performance compared to the US, and the major risks on the horizon.
Regarding the post-COVID economy, the note emphasizes the need for a rebalancing of fiscal and monetary policies in advanced economies to restore stability. The excess savings and monetary expansion during the pandemic have led to Inflation, but as supply chain disruptions ease and labor supply increases, a soft landing with controlled Inflation is possible.
Europe’s economic underperformance compared to the US is attributed to smaller fiscal support, energy shocks, and structural weaknesses in key industries, particularly in Germany. Despite expectations of gradual easing by the European Central bank, growth in the Eurozone is forecasted to remain sluggish.
When it comes to key risks to the global economic outlook, concerns include a potential hard landing or recession in the US, political uncertainties, China’s structural economic challenges, and rising public debt in advanced economies. The note warns of the potential for turmoil in global bond markets if fiscal drift is perceived in light of upcoming elections in the US and Germany.
In conclusion, Capital Economics highlights the importance of addressing these risks and challenges that are shaping the economic landscape moving forward.
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SOURCE
Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
