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  • Monday 14/11/2022

    Persistently high inflation and aggressive monetary policy tightening seem set to cause a global recession. Central banks around the world have been raising interest rates this year with a degree of synchronicity not seen over the past five decades. Meanwhile, confidence among firms and households has fallen to depressed levels. The pace of monetary tightening will likely slow in the coming months. However, more forceful action might be required to dampen demand and drive inflation out of the economic system. Another risk is that higher interest rates cause problems in the financial system which then seep into the real economy.

    The eurozone is suffering from the surge in energy prices, rising interest rates and weaker external demand. The question is not whether the region faces a recession, but rather how deep and how long it will last. And with inflation to stay uncomfortably high, the ECB will press on with tightening policy. The US economy will likely experience a milder recession in 2023, as rate hikes weigh on consumption and investment (particularly residential). Inflation may well fall back more rapidly than widely expected, opening the door for rate cuts again from late 2023 onwards. In China, despite greater policy stimulus, growth will remain depressed next year as the zero-COVID approach continues to weigh on activity, exports fall, and property construction fails to recover materially.

  • Thursday 5/11/2020
    Buysse / Essers

    COVID-19 has led to profound turmoil and severe disruptions in our lives and economies. Even more than the 2008–2009 global financial crisis (GFC)—which was most directly felt in the United States and in Europe—the current pandemic-induced crisis is affecting nearly all countries around the world. This article provides an overview of the economic developments in emerging market economies (EMEs), with a focus on those that have been systemically important for the world and/or euro area economy: China, India, Brazil, Russia and Turkey. A decade ago, EMEs succeeded in weathering the crisis rather well and were the engine of the subsequent global recovery. Based on our overview, we conclude that EMEs will most likely not play that role again throughout the COVID-19 crisis.