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World outlook: The waiting game...

Matthew Luzzetti

Mark Wall

Jim Reid

In this episode
Deutsche Bank Research has just released the latest World Outlook, featuring updated views on economics and markets. They have called this edition “The Waiting Game…” because they maintain their call for a US recession in Q4 as the lags from tighter monetary policy really start to hit. That weak outlook is evident elsewhere too, and their forecasts don’t expect any G7 country to grow by more than 0.8% in 2024. However, when it comes to the long term they are very enthusiastic about the prospects of AI changing the nature of our economies in the years ahead, which could offer some optimism after a very challenging start to the decade.

World outlook: The waiting game...
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What we discuss
  • Deutsche Bank Research was the first on the Street to forecast a US recession by the end of 2023. Since then, such a view has become consensus. What has changed in terms of the timing and severity of the recession?
  • We have recently seen an emergence of banking stresses in the US and also a debt ceiling deal. How do these two development impact outlook?
  • There is an all-important Fed meeting coming up. How has the dbResearch Fed view changed at all, both in terms of how high rates will need to be raised and for the timing and magnitude of rate cuts?
  • The latest data now show that the euro area recorded a very mild technical recession over Q4-Q1. That reflects the energy shock, which is now dissipating. With the labour market staying resilient, the recession feels more like noise than a genuine end-of-cycle event. What’s the forward view? Is a proper European recession being underestimated?
  • Headline inflation has halved back to 6% as the supply shocks unwind. Will core will fall as quickly?