We started the year with expectations of strong growth and high inflation throughout the first part of 2022. The Russia-Ukraine war accentuated the inflationary trend, now well above Central Bank (CB) targets, which is now set to persist longer than expected.
This triggered a sharp repricing in financial markets, starting with bonds where the amount of global negative-yielding debt plunged from over $11tn at the start of the year to below $2tn as of mid-year.
We expect economic momentum to slow in H2, as inflation acts as a regressive tax on consumers with huge divergences across regions, countries and sectors. However, we do not foresee a global recession. Inflation might be close to peaking in most areas, but we expect the inflationary environment to persist in 2022 and 2023.
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