Macroeconomic Picture - October 2022

United States: Growth. We are still calling a soft landing in the US, with an extended period of sub-par growth for 2023 and 2024. We expect the US economy to grow by 0.9% in 2023 (1.1% Q4/Q4) and 1.3% in 2024 (1.3% Q4/Q4). Inflation. Headline inflation has peaked in the US and is now set to slow progressively as the economy runs below potential. 

  • Core inflation will peak slightly later, between Q3 and Q4 22, and then gradually decline, although remaining above target. The Fed will stick to its tightening cycle until current and leading inflation indicators point clearly in the desired direction.
  • Eurozone: Growth. We now see a somewhat deeper recession in autumn-winter 22-23, followed by a shallower recovery than before. We expect the Eurozone economy to contract by -0.5% in 2023 and to slowly recover to 1.3% in 2024. Inflation. We confirm our call for inflation to peak little below 10% in Q4 22 and to decelerate towards 4% by Q4 23. The outlook remains highly uncertain as highlighted by recent geopolitical events related to gas supply and gas prices. The ECB remains is in a tough position, needing to calibrate policy tightening in a stagflationary context.

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