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78f6c72b509229f3ef77a71224b9fc6b147da4ee04fe56b12377231eaa21e01d;;[{"layout":"detailed","uid":28225,"publicationDate":"01 Jul 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183667.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPRjevfYGAe4akzYD491W6A=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Are durable goods foreshadowing future disinflation?","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Released today, eurozone headline inflation for June accelerated to a fresh record high of 8.6% yoy (+0.5pp from May). Core inflation fell back slightly, easing by 0.1pp to 3.7% yoy, probably also reflecting temporary government measures in Germany to help households cope with surging transport costs. We expect eurozone core inflation to peak at above 4% yoy in the fall, before entering a clear downward trend next year. Our Chart of the Week shows that indicators of pipeline price pressure have started to signal a possible turning point (from extremely high levels), led by durable goods.<\/li><li> This might be an important indication, because prices of durable goods were the first to accelerate in early 2021, kickstarting the wave of price increases that eventually led to the strong and increasingly broad-based inflation surge we are currently witnessing. <\/li><li> There are good reasons why durable goods would be the first spending category for which price increases start to ease, both in the eurozone and globally. First, they are likely to be most vulnerable to households switching expenditure following the reopening of economies. Second, they are usually comparatively more sensitive to the interest-rate cycle. Third, they tend to suffer the most during times of uncertainty and low consumer confidence. <\/li><li> We expect that lower inflation for durable goods will eventually be followed by a deceleration in the other components of underlying inflation, with non-durable goods probably the next in line. The substantial easing of price increases of industrial raw materials is likely to support this process. However, the timing and the extent of future disinflation remains highly uncertain.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}],"hash":"78f6c72b509229f3ef77a71224b9fc6b147da4ee04fe56b12377231eaa21e01d","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":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":"<p><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.<\/p><\/li><\/ul>","synopsisDe":"","synopsisIt":""},{"layout":"detailed","uid":27968,"publicationDate":"20 May 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183351.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJHzbeXiHo2MF23DUsU4xFWg=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - No let-up in eurozone underlying inflation yet","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Eurozone inflation is not letting up. Core inflation (excluding food, energy, alcohol and tobacco) climbed to a new record high of 3.5% yoy in April, while the ECB\u00b4s Supercore measure of underlying inflation, which is based only on those items of the HICP that are deemed sensitive to economic slack, hit 4.0% yoy. <\/li><li> Our Chart of the Week shows that a turning point is not imminent. Our composite indicator of selling-price expectations remains on a steep upward trajectory, having recorded a further large increase in April. It tends to lead core inflation and the ECB\u00b4s Supercore measure by four months.<\/li><li> Most of the current intense upward pressure reflects ongoing supply-chain bottlenecks, indirect effects from surging commodity prices and the reopening of the economy, which is boosting prices of a number of services. Domestic drivers of inflation remain tame, given that wage growth is only accelerating gradually from very low levels. <\/li><li> With underlying inflation expected to be uncomfortably high for some time, inflation expectations will remain a source of concern for the ECB. Only a major growth shock would derail the central bank\u00b4s plan to exit negative rates this year, probably already by the end of the summer. <\/li><li> However, reducing monetary accommodation while economic growth prospects deteriorate increases the downside risks of policy normalization. In a separate note published earlier today entitled 'Tightening in a slowdown: the ECB should be more mindful of downside risks', we look at the factors that complicate the ECB\u00b4s balancing act, making it likely that the rate-hike path priced in by financial markets will prove too aggressive.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}],"countries":[{"name":"Euroland","ticker":"","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=25&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=fd74dfc966e72d45ff2580813616e07a"}]},{"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":27117,"publicationDate":"30 Jan 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182285.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJARrg0KZdE9OVbRQFZum4fs=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182285.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJARrg0KZdE9OVbRQFZum4fs=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182285.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJARrg0KZdE9OVbRQFZum4fs=&T=1&T=1"},"title":"Sunday Wrap","titleDe":"Sunday Wrap: Kurzzusammenfassung","titleIt":"Sunday Wrap: Breve riassunto","product":"Sunday Wrap","synopsis":"<p><ul class=\"ucrBullets\"><li> The characteristics of the recent market moves, and what it tells us.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> Why the Fed is likely to tighten more than is priced in, but not enough to kill markets.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> Short of being able to guess Putin\u00b4s next move, I\u00b4ll highlight one clear miscalculation he has made, namely his attempt to further split the West (while forcing his new friends in the US Republican Party to confront a newfound dilemma). Could that contribute to a decision to back down'<\/p><\/li><\/ul>","synopsisDe":"<p class=\"ucrIndent\"><p class=\"MIBEditorial\"><em>Publikation nur auf Englisch verf\u00fcgbar<\/em><\/p><\/p><p class=\"MIBEditorial\"><ul class=\"ucrBullets\"><li> Die Besonderheiten der j\u00fcngsten Marktbewegungen und was wir daraus ableiten k\u00f6nnen.<\/p><\/li><\/ul><p class=\"MIBEditorial\"><ul class=\"ucrBullets\"><li> Warum die Fed wahrscheinlich st\u00e4rker straffen wird als eingepreist ist, aber nicht genug, um die M\u00e4rkte abzuw\u00fcrgen.<\/p><\/li><\/ul><p class=\"MIBEditorial\"><ul class=\"ucrBullets\"><li> Ohne Putins n\u00e4chsten Schritt vorhersehen zu k\u00f6nnen, m\u00f6chte ich auf eine klare Fehleinsch\u00e4tzung hinweisen, die er getroffen hat, n\u00e4mlich sein Versuch, den Westen weiter zu spalten (w\u00e4hrend er seine neuen Freunde in der amerikanischen Republikanischen Partei zwingt, sich einem neuen Dilemma zu stellen). K\u00f6nnte dies zu einer Entscheidung zugunsten eines R\u00fcckziehers beitragen'<\/p><\/li><\/ul><p class=\"ucrIndent\"><p class=\"MIBEditorial\"> <\/p><\/p>","synopsisIt":"<p class=\"ucrIndent\"><p class=\"MIBEditorial\"><em>Pubblicazione disponibile solo in inglese<\/em><\/p><\/p><p class=\"MIBEditorial\"><ul class=\"ucrBullets\"><li> Le caratteristiche dei recenti movimenti di mercato, e cosa ci dicono.<\/p><\/li><\/ul><p class=\"MIBEditorial\"><ul class=\"ucrBullets\"><li> Perch\u00e9 la Fed probabilmente attuer\u00e0 una stretta pi\u00f9 forte di quanto scontino i mercati, ma non tale da ucciderli.<\/p><\/li><\/ul><p class=\"MIBEditorial\"><ul class=\"ucrBullets\"><li> Non potendo indovinare la prossima mossa di Putin, evidenzier\u00f2 un chiaro errore di calcolo che ha fatto, vale a dire il suo tentativo di dividere ulteriormente l'Occidente (costringendo al contempo i suoi nuovi amici nel partito repubblicano statunitense ad affrontare un nuovo dilemma). Questo potrebbe contribuire alla decisione di fare marcia indietro'<\/p><\/li><\/ul>","analysts":[{"first":"Marco","last":"Valli","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=37&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=dc3604fb61baa8c1a3f2aed1d2468de2"}]}]

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Marco Valli
Global Head of Research
Chief European Economist
UniCredit Bank AG, Milan
Piazza Gae Aulenti, 4 - Tower C -
I-20154 Milan
Italy
+39 02 8862-0537

Marco Valli is Global Head of Research and Chief European Economist at UniCredit. Previously, he served as Chief Eurozone Economist and Chief Italian Economist. Before joining UniCredit in 200...

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