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6 July 2023

ING Monthly: The economic twilight zone

For the global economy, the first half of the year was packed with action. The remainder of the year will see a further weakening of the global economy, a rapid fall in headline inflation, and a dearth of central bank rate cuts

In this bundle

Stuck in the twilight zone between stagnation and recession

We predict that in the second half of the year, the global economy will further slow down and 'slowcessions' are likely in several parts of the…

Key risks to the global outlook

What happens if central banks overdo it on rate hikes, and how a renewed crisis in the banking system could weigh on the global economy

, and 2 others

Commodities, Food & Agri

Energy

Twitchy gas and rangebound oil

European natural gas has seen increased volatility on the back of supply disruptions, while deeper Saudi oil cuts have done little to lift oil prices

Our view on the major central banks

We now expect the Federal Reserve to begin rate cuts in the first quarter of 2024, with the ECB and Bank of England following shortly after

, and

How long can core inflation linger in the eurozone?

Eurozone core inflation is set to eventually come down after the summer

and

United States

US downturn delayed

The US economy has been remarkably resilient in the face of mounting challenges, but tighter monetary and fiscal policy will eventually take their toll and…

A languishing eurozone economy

Eurozone growth is not picking up, with services now also losing steam. Inflation is clearly coming down, but the ECB is still set for two more rate hikes

United Kingdom

UK set for further rate hikes despite mortgage squeeze

The Bank of England is likely to raise rates at least twice more, though better inflation readings through the summer should allow a pause before winter

China

China to see weak growth and limited stimulus

Weak activity plus limited stimulus equals forecast downgrades

Disinflation continues across CEE at varying speeds

Czech Republic

Hungary

Poland

Disinflation continues across CEE at varying speeds

Faster disinflation does not necessarily mean faster rate cuts. The local story will play an increasingly important role in the second half of the year

, and

FX: The dollar downtrend remains on hold

We think the dollar downtrend is delayed, but should still materialise later this year and in the second half of 2024

Rates

Oomph outweighs angst, pushing market rates up

The direction for market rates is up for now. There will be a much bigger drop to come ahead, but the dominant move now is towards re-testing highs seen just…

ING's July Monthly: The economic twilight zone

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ING’s July Monthly: The economic twilight zone

All of the latest from our team on what could be next for the global economy