Macroeconomic Picture - July/August 2022

United States: signs of decelerating growth are increasing as high inflation bites into consumers’ disposable income and companies’ margins. While we do not see activity contracting in Q2, risks to our projections remain on the downside. We do expect the US economy to grow below potential between now and yearend and to remain on a similar sub-par growth trajectory into 2023, as tighter monetary policy impacts the most interestrate-sensitive sectors of the economy.

Eurozone: The upside revision to the Q1 GDP figure (from 0.3% to 0.6%) masks weak domestic demand, especially on the consumption side, and does not bode well for the rest of the year. Higher realised and projected inflation will translate into weaker domestic demand dynamics, making us expect broadly flat growth this year, with contraction risks concentrated in Q2 and Q4. 2023 growth expectations have also been marked down significantly on much weaker momentum entering the new year. Inflation is being revised higher on higher oil price dynamics, unabated pipeline pressures and broadening and accelerating inflationary pressures.

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