The global economy succumbed to falling gross domestic product (GDP), alongside high and rising inflation in the second quarter of 2022 as supply-shocks and lingering pandemic-related disruptions dented the recovery of major economies, according to a recent report by Fitch Ratings.
Fitch noted that real GDP fell in sequential quarter-on-quarter (q/q) terms in the second quarter of the year in the US, China, UK and Poland and is also estimated to have fallen q/q in Russia and India based on 2Q22 year-on-year outturns as highlighted in its August “20/20 Vision” chart pack.
This, the report explained, reflected a variety of factors including pandemic lockdown restrictions in China, inventory dynamics related to earlier supply-chain disruptions in the US and the broader impact of supply-shocks and inflation pressure stemming from the Russia-Ukraine war.
According to the report, while some of the 20 major advanced and emerging economies in focus have yet to report their Q2 GDP outturns, it is a no-brainer that world GDP fell, given the weight of the US and China in the global GDP aggregate.
The report further noted that global CPI inflation maintained an upward swing in 2Q22 despite having started the quarter at already highly elevated levels. Also, monthly data indicate that pressures will continue to intensify into the third quarter of 2023.
Dwelling further on the extent of rising inflation in major economies, the report noted that inflation is not far from double-digits in the US, considered the world’s largest economy as well as the eurozone where it recently breached 10 percent in the UK.
Fitch’s bi-monthly “20/20 Vision” chart pack covers the 20 major economies that are the focus of Fitch’s economics team’s global macro analysis.
