Hans-Jörg Naumer (Allianz Global Investors) | We still believe it’s quite likely that the world economy continues to grow, albeit weakly. However, in the second half of 2022, the risks of a slowdown in the short-term have substantially increased. A continued heightening of geopolitical crises and the consequent rise in the prices of energy and food, could cause a sharp decline in the European economy, already in difficulty, and even in the global economy.
Key aspects for the next week :
For next week, it seems the data will not show an improvement. There is a series of economic indicators, mainly about confidence, which will be examined very closely with regard to the question of “recession” and/or “inflationary pressure”.
On Monday, the University of Chicago will publish its Activity Index for the US.
On Tuesday, Flash Consumer Confidence data is published and the preliminary indices for the manufacturing and services PMIs, in both cases for the Eurozone. The manufacturing PMI data for Japan as well.
On Wednesday, focus will be on new orders in the US, where a rise of 1% quarter-on-quarter is estimated; the last increase was 2%.
On Thursday, initial and and existing unemployment claims for the previous week will be published by the US Labour Department. These figures should remind us that the country’s labour market is going full steam ahead, with the corresponding repercussions for inflation.
Thursday also sees the publication of the Ifo index for the business climate in Germany. It will be important to see whether the decline in expectations, already very marked, is also now affecting the perception of the current situation.
The most significant data on Friday should be the Personal Consumption Expenditure Deflator (PCE deflator) in the US. This index of inflation in personal consumption is not just one of the main Fed indicators, but is also a broad reflection of consumer prices’ inflation.