KUALA LUMPUR (June 7): The global economy should continue to register positive growth in the second half (2H) of this year, albeit at a slower pace, but it is not likely to fall into recession, said HSBC global private banking and wealth Asia chief investment officer Fan Cheuk Wan.
“We don’t forecast any recession in any major economies except for Russia, because of sanctions. When we look at the bond market development, we no longer see an inverted yield curve, we expect the recession fears will gradually ease going into the 2H of the year,” she said during HSBC's 2H2022 Investment Outlook virtual briefing on Tuesday (June 7).
Fan expects global economic growth to slow down to 3.4% this year and 2.9% next year amid market concern of inflation and tightening in financial markets. This compares to 5.8% global growth in 2021, she notes.
“Global inflation is progressively easing but slowly because it has become stickier due to supply chain disruptions and global energy shock,” she said.
Although global inflation is forecasted to remain high at 7.1% this year, it should decelerate to 5.1% next year, Fan said, adding that “inflation outlook in Asia continues to stay relatively benign as compared to inflation pressure in the US and Europe”.
Fan highlighted several drivers that could ease recession fears going into 2H, including the resumption of economic activities in China, strong post-pandemic recovery in Southeast Asia and potentially massive investment globally following disruptive changes arising from the war and supply chain bottleneck.
“It is important to note that different countries are currently in different states of economic cycles. While we see higher stagflation risk in euro zone because of the impact from the Russia-Ukraine war, but in Asia, we actually see a pretty strong growth recovery in Southeast Asia,” she said, adding that HSBC has overweight calls for more resilient markets like the US, Hong Kong and Asean.