The new old normal: Inflation outlook moves up, but growth is still constrained
- For the first time in many years, we raise our long-term inflation projections across a range of economies, detecting a different inflationary dynamic: Post-recession, output gaps are closing quickly; meanwhile, stimulative fiscal and monetary policies are working in partnership.
- Our global growth forecast sees upside risks from technology and greater labor force participation, yet countering headwinds abound: stalled globalization; a less immigration-friendly atmosphere; the long-expected, gradual slowing of Chinese growth; and continuing weak demographics globally.
- We shave our global real growth forecast slightly, to 2.2%, for our set of economies. Developed market (DM) nominal growth edges up, reflecting a small downgrade to real GDP and the uplift in our inflation forecast.
- LEmerging market growth edges down in both real and nominal terms, reflecting cuts to the China and India real GDP forecasts.
- We raise our trend growth expectations in several DM economies, despite a year of powerful growth since the 2021 edition.
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