According to the latest forecasts released by Citi, the recession will roll from region to region and eventually reach the United States by the end of next year.
Wall Street banks left their 2022 global GDP forecast unchanged at 2.9%, but cut their 2023 production forecast by 0.3 percentage points to 2.2%, citing a 50% chance of a global recession. I’m here.
“We feel that economic performance is likely to suffer for some time from high inflation, slowing real GDP growth and a rapid tightening of monetary policy. We remain concerned about the potential for storms,” said the team led by global chief economist Nathan Sheets.
S&P 500 SPX,
It is up 17% from its mid-June low.
The eurozone and UK will enter recession later this year, and the US will be in recession by the end of 2023, according to Citi. Major emerging markets such as Brazil, Chile and Poland will also enter recession.
Related: UK inflation hits double digits as CPI sees biggest rise since 1980s
“Frankly, the global economy is still grappling with the legacy of the supply shocks of the past year. Given these challenges, the current market recovery is proving to be a disappointing false dawn. I am afraid that it may turn out.
Markets rallied on the view that the Fed will need less rate hikes as US inflation has peaked and inflation needs to be contained, but Citi’s team said commodity inflation remains high. He said he doesn’t know how long it will take to retreat from levels. Or how stubborn service inflation proves.
The reason the Citi team isn’t expecting a global recession is because of the resilience of the US economy so far.
“However, we also recognize that the headwinds of the recession are intensifying. The increasing challenges from the slowing global economy and Fed rate hikes, combined with the observed slowdown in the housing sector and consumer discretionary spending, will Market momentum and service spending could be impacted more quickly and more intensely than we expected, and the recent weakness in consumer sentiment also highlights this risk,” they said. A US recession in the first quarter of 2023 could become critical mass leading to a broader global economic slowdown.