Global economy facing headwinds: war in Europe, supply bottlenecks and tighter financial conditions. Slight easing of energy prices should lead to slightly lower inflation rates. Robust domestic demand in Europe is dampening the immediate threat of recession.
Chart of the month
Two years after the outbreak of the pandemic, the unemployment rate is back below pre-crisis levels in many places in Western and Northern Europe. In France, Germany and Switzerland, it is even at a multi-year low. This testifies to the success of the coordinated monetary and fiscal policy steps to prevent an economic crisis as a result of the pandemic. The war in Ukraine is once again causing fears of recession. However, the robust labour market data supports private consumer demand and, in combination with the currently high inflation, indicates increased wage pressure, which the central banks should counter by normalising monetary policy.