. Long-lasting war in Ukraine, hurting activity and pushing commodity prices higher for longer.
. Covid-19 resurgence leads to renewed mobility restrictions and supply-chain disruptions.
. Economic downturn, with high inflation out of the control of CB.
. Several EM default and public debt sustainability issue in DM.
. Renewed monetary and fiscal accommodation.
. CB may deviate from their guidance and lose credibility.
. Policies and investments to fight climate change are postponed or implemented disorderly.
. Ukraine war pushes up commodity prices temporarily.
. Covid-19 becomes endemic.
. Growth divergence in 2022: stagnation in Europe, contraction in China in Q2, a solid trend in the US.
. High inflation due to high commodity prices, supply-side bottlenecks and rising wages.
. Monetary policy asynchrony: Fed and ECB to hike rates; PBoC on an easing bias.
. Fiscal policy to smooth the short-term impact of energy prices.
. Climate change adds to stagflationary trends.
. Ukraine war ends and sanctions are withdrawn.
. Lower commodity prices, inflation falls back.
. Covid-19 recedes quickly.
. Extra savings and wage rises fuel consumption.
. Inflation under control and CB normalisation.
. Higher interest rates due to strong investment and few savings.
. Debt is sustainable thanks to strong growth and fiscal discipline.
. Climate change policies and energy transitions become first priority.
Inclusive & sustainable growth
The great divergence