Impact of Inflation on the World Economy and Key Sectors (Agriculture, Automotive, Financial services, Consumer and Retail) - Thematic Research

Impact of Inflation on the World Economy and Key Sectors (Agriculture, Automotive, Financial services, Consumer and Retail) - Thematic Research

Summary

Inflation Outlook - Executive Briefing report analyzes the outlook for inflation and the implications for the global economy, major countries and regions, as well as key industry sectors This report includes expert opinions from our industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world. On a 12 month view, it appears likely that commodity prices have peaked, but the outlook for margins will vary by region Input price inflation is falling due to the weakening economic outlook in China (largely driven by the slowing property market), as well as European demand weakness The main upside risk to inflation is Russia’s ‘forever war’ in Ukraine.

Recessions across many developed markets ( are expected before the end of 2022 which will in turn reduce the labor component of inflation However, while this lowers input costs, it means reduced demand as the pressure on consumers increases This is likely to see central banks ease on the current interest rate rising cycle, with the US likely to be the first developed market see a return in consumer demand as disinflation helps to restore purchasing power China’s cyclical outlook is sharply divergent from western markets, with the end of zero COVID, most likely around Q 2 next year, releasing pent up demand, though on a much smaller scale than see in developed markets in 2021.

Key Highlights

12 month outlook: Commodity prices have peaked, but margins outlook will be region specific

• As prices rose in 2021 2022H1, firms across all sectors were able to pass on these costs while demand boomed.
• Input price inflation is retreating ahead of the US demand slowdown, and is driven instead by China’s property market brakeage, and more advanced European demand weakness. That means pricing power in the US should hold up better.

2023: Recession will pull down labor cost inflation but also rein in pricing power

• Recession across DMs is likely before end 2022; labor cost pressures should then moderate. This helps with input costs but also means an erosion of pricing power as demand weakens, though central banks will switch to easing once the labor market cracks.

The rest of the 2020s: A higher inflation regime

• A global shift in labor markets means higher wage inflation, while de globalization means domestic costs in DMs will be more responsive to domestic labor market conditions.
• Demand is set to rebuild, particularly in the US, where greater policy tolerance of wage growth and resultant inflation means a re building of middle income household demand.

Scope

• The report analyzes the outlook for inflation and the implications for the global economy, major countries and regions, as well as key industry sectors. This report includes expert opinions from our industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world.
• Provides detailed global macroeconomic outlook analysis.
• Covers detailed insights on the Agriculture, Automotive, Financial services, Consumer and Retail sector outlook.

Reasons to Buy

• Gain access to understanding the impact of inflation on the world economy and key sectors.
• View inflation outlook analysis and the implications on the global economy, major countries and regions, as well as key industry sectors.
• Refer expert opinions from industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world.