The global economy is stuck in the “twilight zone”, between stagnation and recession, ING finds. He predicts, in fact, that economic growth will slow down further in the coming period, with the result that many countries of the developed world will sink into “slowcession” (from the words “slow” and “recession”).

As ING economist Carsten Bzerski notes, the first half of 2023 was characterized by events that could fill an entire year. Europe avoided an energy crisis thanks to a mild winter and government support measures. The opening of China’s economy after the coronavirus lockdowns has been weaker than everyone had hoped. A banking crisis in the US and Switzerland did not lead to a global financial crisis, as many feared. The unprecedented tightening of monetary policy by central banks was accompanied by a gradual reduction in inflation, but was not necessarily the result of it.

Looking to the second half of the year, ING estimates that China’s openness will continue to be weak, the US economy is not expected to experience a winter recession and the Eurozone will remain between stagnation and recession.

As many economies slow, pressures for wage increases are expected to ease, reducing inflationary pressures and ultimately leading to falling prices. Thus, ING estimates that both inflation and core inflation will ease faster than central banks expect towards the end of the year.

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