J. Safra Sarasin's - Global View

The global economy has been hit by a series of shocks over the past two years, which have made existing tensions worse. An example of this is the acceleration of global inflation in 2022, caused by the start of the War in Ukraine. Additionally, there is a great deal of uncertainty and large tail risks surrounding these crises, which cannot be ignored. The use of a nuclear weapon in Ukraine or a military confrontation between the US and China in the next two years would significantly change the outlook for the global economy. J. Safra Sarasin's report suggests that although this is a "world of polycrisis", their central view assumes a more stable world, where energy and food prices stabilize or decrease, helping inflation to move towards central banks' targets by the end of 2024. However, this path also involves some tightening of monetary policy in the coming months, and they predict policy rates in Europe and the US to peak in restrictive territory by mid-2023. With China unlikely to provide much growth for the global economy, the implication is for both the US and Europe to fall into recession next year.