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26c8a988b5df6d482d8d491fb73bc9d2a6de74359926102f333c69d706248212;;[{"layout":"detailed","uid":28210,"publicationDate":"29 Jun 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183650.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPRjevfYGAe4I4tua3mCuHw=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Downside risks to growth building (3Q22)","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> GDP growth will probably slow to 3.0% this year (previously 3.3%) and 2.8% next year (from 3.4%). Headwinds from the Russia-Ukraine conflict have combined with COVID-19 lockdowns in China to push inflation up further and slow the pace of economic activity. Central banks have become even more hawkish. Tighter financial conditions, a squeeze in real incomes and a sharp downturn in consumer confidence will increasingly weigh on activity. Trade is weakening, also reflecting a switching of expenditure away from goods. Global inflation will probably peak soon, but the speed and extent of the subsequent decline remains highly uncertain. We think that central banks and markets are underestimating the downside risks to growth. If Russian energy imports suddenly stop, much of Europe will likely see negative GDP growth for 2023.<\/li><li><strong> US: <\/strong> We forecast GDP growth of 2.4% this year and below-potential growth of 1.3% next year. Economic momentum is slowing, particularly for interest-rate-sensitive sectors such as housing and durable goods. CPI inflation will likely peak at about 9% yoy in 3Q22, with monthly inflation prints likely easing to levels consistent with target by around the turn of the year. Longer-run measures of inflation expectations are still well anchored and average hourly earnings growth is moderating. We expect the Fed to raise the target range for the federal funds rate into restrictive territory by the end of the year, to 3.25-3.50%, which we see as the peak. Rate cuts could start in late 2023.<\/li><li><strong> Eurozone: <\/strong> GDP is likely to expand by 2.8% this year and by 1.3% in 2023. Survey indicators signal a weakening of growth momentum in the spring and downside risks for economic activity in 2H22. Headline and core inflation have further to rise, although we see initial signs that pipeline price pressure might start easing soon from extremely high levels. Weak growth and slowing inflation will probably force the ECB to stop hiking in 1Q23 once the depo rate reaches 1.25%, i.e. the lower end of the 1-2% range the central bank regards as 'neutral'. We expect the announcement of a credible anti-fragmentation facility featuring potentially unlimited purchases and light conditionality.<\/li><li><strong> CEE: <\/strong> The EU-CEE economies will likely grow on average by 3.6% in 2022 and 2.6% in 2023, with the Western Balkans lagging. Turkey could grow by 4.4% in 2022 and 3.3% in 2023. In Russia, the economy could shrink by around 10% this year and stall next year. Hungary and Slovakia would experience the biggest direct impact from a lack of Russian energy imports, followed by Bulgaria, Czechia and Serbia. Inflation is likely to peak this year in most CEE countries, except for Hungary and Poland, where the peak could be postponed to 2023. Inflation is expected to remain well above targets in 2023. We think that central banks will end rate hikes in the autumn, but the scope for rate cuts in 2023 is very limited. The CBR could cut the policy rate to 8% in 2022 and to 7% in 2023. The CBRT might hike in 2023 if there is a change in government.<\/li><li><strong> UK: <\/strong> We forecast GDP growth of 3.4% this year and 0.6% next year. The economy will be skating on the edge of recession for the next few quarters amid a big squeeze in real disposable income. Inflation is set to stay higher for longer in the UK compared to peers, peaking at above 9% yoy in 4Q22, but should fall quickly to below 2% by end-2023. The BoE will probably stop raising the bank rate after a final 25bp hike to 1.50% in August.<\/li><li><strong> China: <\/strong> GDP will likely grow by 4.0% in 2022 and by 4.2% in 2023. While most COVID-19-related restrictions were lifted at the beginning of June, the supply side of the economy is recovering faster than the demand side as Chinese consumers continue their cautious behavior to avoid quarantines. The central government is stepping up efforts to support the economy and reduce the negative impact of future waves of contagion on the domestic economy through a combination of monetary and fiscal policy measures. The PBoC might tolerate further weakening of the CNY towards 7.00 against the USD to support exports. <\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"26c8a988b5df6d482d8d491fb73bc9d2a6de74359926102f333c69d706248212","available":"0","settings":{"layout":"detailed","size":"default","showanalysts":"2","showcompanies":"2","showcountries":"2","showcurrencies":"2","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","shownav":"0","oldestedition":"","limit":"5"}},{"layout":"detailed","uid":27588,"publicationDate":"30 Mar 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182906.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJW4PBk9_ILJawJy3UT8KTA=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Central banks walk a thin line (2Q22) ","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> The economic outlook has worsened. We see global GDP growth of 3.3% this year (from 4.2%) and 3.4% next year (from 3.7%). The Russia-Ukraine crisis has caused a sharp rise in commodities prices and inflationary pressure, further global supply-chain disruption, a tightening of financial conditions, heightened uncertainty and a sharp drop in consumer confidence. Rising COVID-19 cases, notably in China, pose additional risks. Global central banks will walk a thin line as the growth-inflation trade-off deteriorates.<\/li><li><strong> US: <\/strong> We expect GDP growth of 3.0% this year and 2.2% next year, which includes a cumulative 0.3pp reduction in growth due to the Russia-Ukraine crisis. US trade and financial linkages with Russia and Ukraine are relatively small and the US economy entered the crisis in a good place, with strong household balance sheets and a very tight labor market. After likely peaking at about 8.5% yoy in the coming months, we see headline CPI inflation declining to moderately above 2% in 2023 due to base effects, lower energy prices, demand moderation and some improvement in supply bottlenecks. We now expect the Fed to hike by 125bp in the remainder of this year, up from 100bp previously, but still see the peak for the federal funds rate at 2-2.25% next year.<\/li><li><strong> Eurozone: <\/strong> Assuming that Russia continues to export oil and gas to Europe, we forecast GDP in the eurozone to expand by 3.1% this year and 2.5% in 2023. This growth trajectory is about 1pp lower than before the Russia-Ukraine conflict started. An easing of pandemic restrictions, still large amounts of excess savings for households and targeted fiscal stimulus are important mitigating factors. Our inflation forecast for 2022 has surged to close to 7%, followed by a decline to an average rate of about 2% in 2023. Facing a worsened trade-off between lower growth and higher inflation, the ECB confirmed its hawkish pivot and announced a plan to speed up the reduction of net asset purchases in 2Q22, aiming to end QE in 3Q22. We still expect two 25bp hikes in 1H23, although risks have shifted toward a first move taking place already before year-end.<\/li><li><strong> CEE: <\/strong> We expect the Russian economy to shrink by around 12% this year (peak-to-trough of around 20%), with a muted rebound in 2023 akin to stagnation. In EU-CEE and in the Western Balkans, GDP is expected to grow by around 2.3% in 2022 and by 3.6% in 2023. For this group, we estimate the direct impact of the conflict on GDP growth at 1.5-3pp in 2022 and up to 1.5pp in 2023. Turkey could grow by around 4% this year and 3.8% in 2023. If the EU stops importing oil and gas from Russia, the Russian economy could shrink by around 20% this year and fail to rebound in 2023. In such a scenario, EU-CEE and the Western Balkans would probably fall into recession. Inflation could reach 30-year highs due to rapidly rising commodity prices and supply-chain bottlenecks, prompting additional rate hikes and FX interventions.<\/li><li><strong> UK: <\/strong> We forecast GDP growth of 3.4% this year and 1.8% next year, after revising down growth by a cumulative 0.6pp due to the Russia-Ukraine crisis. The UK imports little from Russia but, as a net importer of commodities, it faces a substantial terms-of-trade shock. Inflation will likely peak at about 8.5% yoy in April and stay high through 3Q23 before falling below 2% in 4Q23. The MPC will likely raise the bank rate to 1.25% by August and then stop.<\/li><li><strong> China: <\/strong> We expect GDP to grow 4.7% in both 2022 and 2023. New outbreaks of COVID-19 that are forcing millions of Chinese into new lockdowns will likely weigh on economic performance in 1H22, adding to headwinds from the Russia-Ukraine conflict, rising commodity prices and real estate vulnerabilities. However, the government has signaled it will deploy further policy support to ensure stable economic performance and mitigate domestic and external growth headwinds. An easing in fiscal and monetary policy is likely.<\/li><\/ul>","synopsisDe":"","synopsisIt":""},{"layout":"detailed","uid":26840,"publicationDate":"10 Dec 21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181953.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJB6dDKN-ZlwQwmzPU8IXdJ8=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_182038.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJBcmVMUvH8DWSidpqkZAj_U=&T=1&T=1","protectedFileLinkIt":""},"title":"UniCredit Macro & Markets - 2022-23 Outlook: A bumpy road towards normalization","titleDe":"","titleIt":"","product":"Macro & Markets","synopsis":"<p><ul class=\"ucrBullets\"><li><strong>Macro: <\/strong> We are lowering our global GDP growth forecast for 2022 to 4.2%, as supply bottlenecks and higher inflation last for longer than anticipated. The US will likely recover its pre-pandemic GDP trend by 4Q22, while the eurozone might get there a year later. Monetary policy will gradually normalize. We expect the Fed to hike rates twice next year and three times in 2023. The ECB\u2019s QE will likely continue at a slower pace into 2023, with no change in policy rates.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>FI: <\/strong> UST yields are likely to drift upwards accompanied by a long-lasting bear-flattening trend. Bund yields should remain low, with the yield curve showing a modest bear-steepening as ECB purchases gradually decline. Pulled by diverging forces, the 10Y BTP-Bund spread will probably trade around 125bp.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>FX: <\/strong> Interest-rate differentials are set to remain the major driver of FX. In G10, we like the USD, GBP, NOK and the commodity currencies against the EUR, JPY, CHF and SEK. New COVID-19 developments may add volatility but are unlikely to prevent EUR-USD from dropping to 1.10 and below.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>Equities: <\/strong> European equities have the potential to grow by about 10% in 2022, mainly supported by solid earnings growth, while volatility may remain elevated over the next few months, as uncertainty surrounding COVID-19, high inflation rates and the policy response of central banks is likely to persist.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>Credit: <\/strong> We expect European corporate credit spreads will tighten by the end of 2022. Rising inflation, higher yields, supply-chain frictions and pandemic developments are the main challenges but their impact on performance is expected to be contained by supportive technical factors.<\/p><\/li><\/ul>","synopsisDe":"","synopsisIt":""},{"layout":"detailed","uid":26246,"publicationDate":"28 Sep 21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181231.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJONVgIeo7x-ZU6taDmKjrKk=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Central banks head for exit (4Q21)","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> Growth has peaked, and we are fine-tuning our global GDP growth forecast for this year, to 5.8% from 6%, and for next year, to 4.6% from 4.7%. The spread of the Delta variant has weighed on demand over the summer, while shortages of materials and labor continue to constrain supply and will probably last into 2022. Growth is likely to remain robust next year, thanks to accumulated household savings, inventory restocking, and the declining economic effects of each new wave of COVID-19. However, growth rates will naturally ease as pent-up demand, fiscal support and spare capacity fade. Inflation will likely remain high through year-end before moderating as base effects turn negative and supply starts to adjust. Central banks will continue to chart a gradual exit from emergency measures.<\/li><li><strong> US: <\/strong> We now expect GDP growth of 5.8% this year (from 6.1%) while our forecast for next year is 3.9% (from 3.8%). This is the result of a downward revision to growth in 3Q21 and slightly stronger growth early next year. GDP is likely to reach its pre-pandemic trend line in 1Q22, a quarter later than previously expected. Inflation is close to peaking but will likely remain elevated well into next year as supply disruption looks set to last longer than anticipated. We continue to see inflation falling back towards 2% by end-2022. The Fed will likely start tapering its QE in November and cease net purchases around mid-2022. We expect the first rate hike in early 2023, followed by a second hike in 2H23.<\/li><li><strong> Eurozone: <\/strong> GDP is likely to expand by 5% this year and by 4.3% in 2022. Activity is set to increase strongly again in 3Q21, followed by slower growth at the turn of the year as the reopening boost fades and manufacturing output slows. GDP will probably recover to its pre-pandemic level by year-end. Prospects for 2022 remain positive, supported by deployment of NGEU funds, but activity is unlikely to return to its pre-crisis trend before 2023. Inflation will probably peak in November at close to 4%, before falling sharply over the course of next year. The ECB seems keen to close the PEPP in March. If so, maintaining easy financing conditions and a smooth transmission of monetary policy would require stepping up the pace of the APP and increasing its flexibility.<\/li><li><strong> CEE: <\/strong> We expect economies in EU-CEE and in the Western Balkans to grow by around 6% in 2021 and 4.6% in 2022. Turkey\u00b4s economy could expand by 9.7% in 2021 and 5.5% in 2022. In Russia, GDP growth could slow from 4% in 2021 to 2.4% in 2022. In 2021, the recovery has been driven by pent-up consumer demand\u00a0and exports. In 2022, investment could contribute more to growth, helped in EU-CEE by NGEU disbursements, in Russia by spending from the National Wealth Fund and in Turkey by easier financial conditions. Supply-chain bottlenecks, rising energy prices and buoyant consumer demand could keep inflation outside target ranges for longer than central banks currently expect. Further monetary tightening is needed to ensure price stability.<\/li><li><strong> UK: <\/strong> We are lowering our GDP growth forecasts to 6.4% for this year (from 6.7%) and 5.9% next year (from 6.1%), delaying the time when we expect GDP to surpass its pre-pandemic level by one quarter to 2Q22. Inflation is set to rise to almost 4% in 4Q21 and remain there through 2Q22, before falling back to close to 2% by end-2022. The MPC seems prepared to raise rates as soon as February, but we expect lower growth and higher unemployment to delay a hike until late 2022\/early 2023.<\/li><li><strong> China: <\/strong> We are reducing our GDP growth forecast for 2021 to 8.2% from 8.5%, and for 2022 to 5.0% from 5.7%. The summer turned out to be challenging due to a mix of natural disasters and the spread of the Delta variant. Looking beyond 3Q21, there are several headwinds that might dent the economic outlook, from abrupt state interventionism to rising vulnerabilities in the real estate sector and an economically-damaging 'zero tolerance' approach to COVID-19. Fiscal and monetary policy are likely to remain accommodative. <\/li><\/ul>","synopsisDe":"","synopsisIt":""},{"layout":"detailed","uid":25700,"publicationDate":"30 Jun 21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_180565.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJELjWQr-cDcAAyiEAIaqX5Y=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Recovery strengthens, price pressures won\u00b4t last (3Q21)","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> We are revising up our global GDP growth forecast for this year slightly to 6.1% (from 5.8%) while our estimate for next year is broadly unchanged at 4.6%. The upward revision reflects stronger near-term consumption growth in several advanced economies. In contrast, the recovery in several major emerging markets has slowed. Downside risks remain from new variants. Supply bottlenecks and strengthening demand as economies reopen have led to surging input prices and some pass-through to consumer prices, but will very likely be temporary. The major central banks are likely to look through it.<\/li><li><strong> US: <\/strong> The economy is expanding rapidly and GDP growth will likely be slightly stronger than previously expected, at 6.6% this year (from 6.4%) and 3.8% next year (from 3.7%). Output is set to exceed its pre-pandemic trend already in 4Q21. We are also raising our CPI inflation forecast for this year, to 3.9% from 3.3%, reflecting higher recent outturns and ongoing demand-supply imbalances into the autumn. However, inflation will likely return to just above 2% by end-2022. We expect Congress to pass a longer-term economic plan with additional spending worth USD 2-3tn over the next decade, partly financed by USD 1tn in higher taxes. The Fed will likely announce in December that tapering will start in January 2022 and last around a year. Fed rate hikes are likely to be gradual, beginning in late 2023, with risks skewed towards an earlier hike.<\/li><li><strong> Eurozone: <\/strong> We are increasing our GDP growth forecast for this year to 4.5% from 4.0%, leaving the estimate for 2022 at 4.3%. We now see GDP reaching its pre-pandemic level in 1Q22. The services sector is recovering, while manufacturing activity remains solid, despite supply shortages and surging production costs. We forecast average CPI inflation of 2% this year, with a peak at 2.5-3% in autumn, followed by a slowdown to 1.5% in 2022 amid muted core inflation and base effects. The future of the PEPP after March hangs in the balance. Its phasing-out would pose challenges to the ECB, given the need to preserve sizeable stimulus and a smooth transmission in all jurisdictions while underlying inflation remains well below target. This would require a substantial beefing-up of the standard QE program, an increase of its flexibility along the lines of the PEPP, and enhanced forward guidance for reinvestments.<\/li><li><strong> CEE: <\/strong> GDP in EU-CEE and in the Western Balkans will likely grow by about 5% in 2021 and 4.5% in 2022. Having avoided a recession in 2020, Turkey\u00b4s economy could expand by 7.5% in 2021 and slow to 3.5% in 2022 if financial conditions remain tight. Russia\u00b4s GDP is expected to grow by 3.4% this year and 2.6% next year. Hungary, Poland, Romania, Russia and Serbia could return to pre-pandemic levels of activity in 2021, with the other countries following in 2022. Pent-up demand, government transfers and lower savings rates are likely to drive the recovery. Pre-funding from NGEU might start arriving in 3Q21, further boosting investment. We expect additional rate hikes this year in Hungary, Czechia and Russia. The NBP might start raising rates in 4Q21 or 1Q22, followed by the NBR in 2022. The CBRT is likely to cut rates in 2021-22 and the CBR in 2022.<\/li><li><strong> UK: <\/strong> We are revising up our GDP growth forecast for this year to 6.9% (from 6.0%) due to faster near-term growth, while leaving our forecast for 2022 broadly unchanged at 6.2%. Daily new COVID-19 cases are rising again but the vaccine rollout appears to have broken the link between cases and hospitalizations. We expect the MPC to leave monetary policy unchanged through 2022, but risks are skewed towards action before the end of next year.<\/li><li><strong> China: <\/strong> We confirm our GDP growth forecast of 8.5% for 2021 and 5.7% for 2022. After the sharp rebound in activity between 2Q20 and 4Q20, which was supported by a combination of ultra-easy monetary and fiscal policies, the Chinese economy is losing some momentum as the stimulus is gradually being removed. Inflation pressures have probably peaked.<\/li><\/ul>","synopsisDe":"","synopsisIt":""}]


Chiara Silvestre
UniCredit Bank AG, Milan
Piazza Gae Aulenti, 4 - Tower C -
I-20154 Milan

Chiara Silvestre is an economist based in Milan. Her focus is on Sweden and Norway, and she supports the analysis and forecasting of indicators of European economics. After being awarded the qualif...

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