1、Global growth slowed through 2022 on a di mi ni shi ng reopeni ng boost,fiscal andnmonetary ti ghteni ng,Chi nas Covi d restri cti ons and property slump,and theRussi a-Ukrai ne war.We expect global growth of j ust 1.8%i n 2023,as USresi li ence contrasts wi th a European recessi on and a bumpy reop

2、eni ng i n Chi na.The US should narrowly avoi d recessi on as core PCE i nflati on slows from 5%nnow to 3%i n late 2023 wi th a pp ri se i n the unemployment rate.To keepgrowth below potenti al ami dst stronger real i ncome growth,we now see theFed hi ki ng another 125bp to a peak of 5-5.25%.We dont

3、 expect cuts i n 2023.How can core i nflati on fall so much wi th such a small employment hi t?Thenreason,we thi nk,i s that thi s cycle i s di fferent from pri or hi gh-i nflati on peri ods.Fi rst,post-pandemi c labor market overheati ng showed up not i n excessi veemployment but i n unprecedented

4、j ob openi ngs,whi ch are much less pai nful tounwi nd.Second,the di si nflati onary i mpact of the recent normali zati on i n supplychai ns and rental housi ng markets sti ll has a long way to go.And thi rd,long-term i nflati on expectati ons remai n well-anchored.The Euro area and the UK are proba

5、bly i n recessi on,mai nly because of the realni ncome hi t from surgi ng energy bi lls.But we expect only a mi ld downturn asEurope has already managed to cut Russi an gas i mports wi thout crushi ngacti vi ty and i s li kely to benefit from the same post-pandemi c i mprovements thatare helpi ng av

6、oi d US recessi on.Gi ven reduced ri sks of a deep downturn andpersi stent i nflati on,we now expect hi kes through May wi th a 3%ECB peak.Chi na i s li kely to grow slowly i n H1 as an Apri l reopeni ng i ni ti ally tri ggers anni ncrease i n Covi d cases that keeps cauti on hi gh,but should accele