Finimize - 🌎 Woe is the global economy

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Today's big stories

Two major economic organizations lowered their growth expectations for this year
With signs emerging that stocks might be about to rally, here are the ones that could benefit most – Read Now
Inditex reported booming quarterly profits

Dark Days

What’s Going On Here?

Not one, but two major intergovernmental economic organizations slashed their forecasts for global economic growth this week.

What Does This Mean?

The OECD and the World Bank weren’t exactly in good spirits when they gave their 2022 forecasts in December and January, and it goes without saying that a lot’s happened since then. Just a recap in case you’ve been off the grid: the Ukraine war has driven up the price of energy and food across the world, while China’s zero-Covid policy has disrupted international trade. So things were only going to go one way: the OECD has now downgraded its global economic forecast from 4.5% to 3%, and the World Bank from 4.1% to 2.9%. Both of them put it down to skyrocketing prices, with the OECD even near-doubling its inflation forecast for its member countries in 2022.

Why Should I Care?

The bigger picture: Brits are in the…
As for next year, the OECD is expecting the global economy will grow just 2.8%. But its outlook for one country is particularly dire: the organization doesn’t think the UK economy will grow at all. That’s because its inflation rate is higher than most other advanced economies, meaning it’ll need to raise interest rates faster to keep prices under control. That and rising taxes will put a dampener on spending, which could cripple the UK’s growth. In fact, only Russia – hobbled by sanctions – is set to perform worse among the G20.

Zooming out: It could be worse.
The OECD did say that it was more hopeful that we wouldn’t see stagflation – the combination of high inflation, low growth – on the scale that we did in the 1970s, when an oil price surge led to runaway prices and severe unemployment. It pointed out that developed economies are driven more by services than by energy these days, while central banks – now mostly independent from governments – are freer to make tough decisions to tackle inflation.

You might also like: Elon Musk has a “super bad feeling” about the economy. Here’s why you shouldn’t.

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Analyst Take

Is This The Rally You’ve Been Waiting For?

Carl Hazeley, Analyst

It’s hard not to feel like we’re in a state of limbo right now.

After all, we’re just waiting to see if some bleak economic news will suddenly drive stocks even lower than the 13% they’ve already fallen this year.

Or maybe we’re hoping for something to suggest there’s life in the old stocks yet, giving us a glimmer of hope for some much-needed gains.

Well, it turns out there might already be a few encouraging signs, as well as a handful of stocks that could benefit most if this bounceback does come to pass.

So that’s today’s Insight: the signs of life in the stock market, and the stocks and ETFs you could buy into to profit.

Read or listen to the Insight here

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