It is definitely a difficult time for the global economy in the first half of 2022. Most asset classes are down year to date, some by quite a lot, and even within some of the bright spots, such as commodities, some of these areas are also down year to date.
In most economies, inflation is very high. Not just headline rates, not just because energy and food price inflation is high, but across the board. The consensus that existed during last year that a lot of this inflation would prove transitory has evaporated very quickly. And central banks have quickly got the message that they have to act quickly and aggressively to rein in inflation.
When underlying inflation is very high and labour markets are extremely tight, demand has to be destroyed one way or another to bring inflation under control. So in our view, recessions is likely to occur across the major economies within the next two years.
