Global Monthly - Inflation: how big is the risk?
This month, the spread of the Delta variant led to renewed worries about growth in the US and China, while in the eurozone and the Netherlands, the earlier reopening led to upside surprises in Q2 GDP. In the eurozone, we think we are past the strongest period of growth linked to the reopening, but we still expect growth to be robust for the remainder of the year.
The spread of Delta is reawakening worries about global growth. However, slowing growth was to be expected after the initial reopening boom, and we do not see Delta derailing the global recovery
Meanwhile, inflation fears persist, and the risks remain elevated, despite a recent cooling in the US
Indeed, we think inflation has probably peaked in the US, and will peak in the eurozone later this year. But the risk of more persistent inflation is nonetheless higher across the Atlantic
Regional updates: in the eurozone, and the Netherlands, Q2 GDP growth surprised to the upside. While momentum has probably peaked, we expect growth to remain strong in H2 2021
In the US, falling goods consumption and stalling services are weighing on near-term growth
Delta is having a more meaningful impact on China, where growth risks look tilted to the downside