Economics: Waiting for the Godot recession

Downturn sceptics

The global economy has held up well, feeding growing scepticism about downturns. On balance, we still think mild recessions are likely later this year or in 2024. But if they continue to prove elusive, the focus on regional divergences could grow.

Regional divergence

Tight monetary policies in the US and Europe make further slowdowns likely at the least. China’s economic rebound is losing momentum but should still prove adequate. Japan looks relatively well placed, with both monetary and fiscal policy still supportive.

Near the peak

Further disinflation looks likely at the global level. And, though it might still be another 12-18 months before inflation returns to 2%, we think rates are close to their peak in the US and Europe. We expect the BoJ to start adjusting its YCC policy later this year.