World macro-economic scenario 2022-2023: betting on a successful double normalisation
- Betting on a successful double normalisation
- Developed countries
- Emerging countries
- Economic & financial forecasts
The outline of our reasonably optimistic scenario for advanced economies is for growth trending from unusually robust to still strong, combined with an easing of inflation. Although there is less to fear from the spread of the new variant (or variants) thanks to vaccines, this scenario assumes that demand will calm down and supply issues will ease. We are betting that this double normalisation will allow inflation to calm down before it becomes harmful.
In the Eurozone, while the pace of recovery has not yet closed the negative output gap, the exogenous inflation shock does not seem capable of altering the scenario of growth decelerating slowly while remaining strong. After 5.2% in 2021, growth is expected to stand at 4.4% in 2022 and then 2.5% in 2023. In spite of its rebound, aggregate demand is being frustrated by lower supply (logistical blockages, strained supply chains, input & labour shortages), and remains weak. It is precisely that weakness that is keeping wage rises limited in our scenario, along with a more persistent yet temporary rise in inflation. Just as in the US, the main risk is that inflation will rise above our expectations. This would compromise growth by eroding purchasing power, rather than by expectations fuelling any wage-price spiral.Catherine LEBOUGRE, Economist