Persistently high inflation will haunt the world economy this year, according to a Reuters poll of economists who trimmed their global growth outlook on worries of slowing demand and the risk interest rates would rise faster than assumed so far.
This represents a sea change from just three months ago, when most economists were siding with central bankers in their then-prevalent view that a surge in inflation, driven in part by pandemic-related supply bottlenecks, would be transitory.
In the latest quarterly Reuters surveys of over 500 economists taken throughout January, economists raised their 2022 inflation forecasts for most of the 46 economies covered.
While price pressures are still expected to ease in 2023, the inflation outlook is much stickier than three months ago.
At the same time, economists downgraded their global growth forecasts. After expanding 5.8% last year, the world economy is expected to slow to 4.3% growth in 2022, down from 4.5% predicted in October, in part because of higher interest rates and costs of living. Growth is seen slowing further to 3.6% and 3.2% in 2023 and 2024, respectively.
Nearly 40% of those who answered an additional question singled out inflation as the top risk to the global economy this year, with nearly 35% picking coronavirus variants, and 22% worried about central banks moving too quickly.
“The odds of an accident have risen and the likelihood of a soft landing in 2022 requires some favourable assumptions and a modicum of good luck,” Deutsche Bank group chief economist David Folkerts-Landau said, noting high inflation, the persistence of supply chain strains and the pandemic, as well as international political tensions.
GRAPHIC: Reuters Poll: Global inflation forecasts 2022, https://fingfx.thomsonreuters.com/gfx/polling/egpbklkmevq/Reuters%20Poll%20-%20Global%20inflation%20forecasts%202022.png This month’s Reuters polls found 18 of 24 major central banks were expected to lift rates at least once this year, compared to 11 in the October poll.
The U.S. Federal Reserve https://www.reuters.com/business/finance/inflation-fighting-fed-likely-flag-march-interest-rate-hike-2022-01-26 on Wednesday signaled it would raise the benchmark federal funds rate from a record low of 0-0.25% in March after shuttering its bond purchase programme.
The Bank of England https://www.reuters.com/markets/europe/inflation-risk-omicron-slowdown-boe-rate-move-balance-2021-12-16 was the first major central bank to raise rates since the pandemic started and is expected to act again, the Bank of Canada https://www.reuters.com/world/americas/timing-bank-canadas-rates-lift-off-knifes-edge-jan-26-hike-possible-2022-01-21 is also seen hiking soon.
In contrast, most economists expect the European Central Bank https://www.reuters.com/business/euro-zone-inflation-burn-hotter-ecb-rates-stay-ice-2022-01-19 and the Bank of Japan https://www.reuters.com/markets/currencies/japan-pm-kishidas-wage-policies-unlikely-support-economy-this-year-most-2022-01-14 to stay put at least until the end of next year.
While the tightening cycle is in early days in developed markets, many emerging market central banks, with a few notable exceptions like Brazil https://www.reuters.com/article/latam-economy-poll-idUSL1N2U00P3 and China https://www.reuters.com/markets/asia/china-growth-seen-slowing-52-2022-modest-policy-easing-expected-2022-01-13, are waiting for the Fed’s cue while grappling with the pandemic and their own economic challenges.
GRAPHIC: Reuters Poll: Global growth outlook – January 2022, https://fingfx.thomsonreuters.com/gfx/polling/lgvdwxwlqpo/Reuters%20Poll%20-%20Global%20growth%20outlook.png “Over the past three decades, developed market central banks led by the Fed have been inclined to see supply shocks boosting inflation as a drag on growth that should be cushioned,” noted Joseph Lupton, global economist at J.P. Morgan.
However, with major central banks showing concern about bringing inflation expectations close to their targets, emerging economies face a similar challenge.
“Pressure on emerging market central banks to act to anchor inflationary expectations is likely to intensify,” Lupton said.
The growth outlook for over 60% of the 46 economies covered in the polls was either downgraded or left unchanged for 2022 and about 90% of respondents, 144 of 163, said there was a downside risk to their forecasts.
While most countries saw cuts in growth forecasts for the fourth quarter and the current one, largely due to the spread of the Omicron coronavirus variant, they were expected to rebound next quarter.
(For other stories from the Reuters global long-term economic outlook polls package)
(Reporting by Shrutee Sarkar; Analysis by Sarupya Ganguly, Anant Chandak, Vijayalakshmi Srinivasan, Milounee Purohit and Indradip Ghosh; Polling and additional reporting by the Reuters Polls team in Bengaluru and bureaus in Buenos Aires, Istanbul, Johannesburg, London, Shanghai, and Tokyo; Editing by Ross Finley and Tomasz Janowski)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
