The Global Economic Landscape: US Resilience, Eurozone Challenges, China's Slowdown, and UK Inflation Concerns

United States:

The US economy has proven to be more resilient than we expected, but the threat of recession lingers on due to lagged effects of rate hikes and tighter lending conditions, while the restart of student loan repayments could come as a financial shock for millions of Americans. We expect a July rate hike but still anticipate several cuts next year.

 

Eurozone:

The latest data show that eurozone growth is not picking up, with services now also losing steam. While it’s not all downhill from here, subdued growth is the best we can hope for. Inflation is now clearly coming down, but the European Central Bank is still set for two more rate hikes

 

China:

The recovery has been narrowly focused on consumer spending, and in particular on catering. But even that looks like it will moderate in the months ahead. The stimulus response so far has been modest, and will probably remain so. Further rate cuts will likely follow which should weaken China's yuan. We are revising our GDP forecasts lower and CNY weaker.

 

UK:

Markets think the UK’s inflation problem is much worse than the US/eurozone, and the Bank of England has doubled down with a more aggressive rate hike. We expect at least two more 25 basis-point hikes, but we think better inflation readings through the summer should allow a pause before winter