Credit Suisse: Global Economy Is Headed For Its Worst Day Ever

(CTN News) _ According to a report by Credit Suisse, weak external demand and dollar strength will weigh on growth in emerging economies.

According to the report, inflation has likely peaked in most emerging economies, but central banks should keep raising rates until 2022.

The economy is deteriorating, so risk assets are suffering. Credit Suisse says industrial production is stagnating, cost pressures are persistent, and financing costs are going up.

“High inflation and tight labour markets have us raising interest rates a lot. Global central banks are raising interest rates at the fastest rate since 1979.

We don’t see any signs of easing. We’ve cut our GDP growth forecasts. “We’ve cut our GDP growth forecasts because of Credit Suisse more tightening, rising real yields,

European energy price shocks, and China’s ongoing property market stress and COVID lockdowns.”

It’s looking like the world’s GDP will grow by 2.6% in 2022 and just 1.6% in 2023.

A recession is possible, but it’s not our base case. The Fed is expected to tighten aggressively to a terminal rate of 4.5-4.75 percent.

There’s already a recession in the Eurozone and the UK.

Energy shock should mitigate the severity of the downturn Credit Suisse from recent fiscal measures. Monetary policy will continue to tighten aggressively, however, as inflation is widening and FX weakness is adding to price pressures.

“We predict the ECB will hike to 3% and the BoE will hike to 4.5 percent by early 2023.”

There’s a growth recession in China.

We’ve cut our GDP growth estimate for this year to 3.5 percent due to lockdown disruptions, low pass-through from infrastructure stimulus, and insufficient real estate support,” the report said.

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