Inflation continues to scale new highs, as energy crisis hits the euro zone and the United Kingdom
On a positive note, international commodity prices continued to ease in October
The third quarter of this year saw growth tapering or even contracting in many economies, suggesting that the global growth slowdown is intensifying as central banks continue to hike rates aggressively to curb the demand impulse, and thereby tame inflation. Additionally, energy supply shortages are creating headwinds to growth, especially in European economies.
Growth in the euro zone economy and Japan moderated on-quarter, while that in the United Kingdom (UK) contracted. Yet, inflation remains elevated: the latest inflation reading in the euro zone and the UK was in double digits. While there are signs of inflation easing in the United States (US), it remains above the 2% target of the central bank.
Ahead of the G20 summit in Indonesia, the International Monetary Fund (IMF) said in its report that slowing global economic growth is increasingly evident in the high frequency indicators. The purchasing managers’ indices (survey-based measures that gauge the momentum of manufacturing and services activities), which track several G20 economies, have steadily worsened in recent months. According to the IMF, “Global economic growth prospects are confronting a unique mix of headwinds, including from Russia’s invasion of Ukraine, interest rate increases to contain inflation, and lingering pandemic effects such as China’s lockdowns and disruptions in supply chains.”
