The Calm Before the Storm

Global Economic Results for the Third Quarter (So Far)

- There had been fears that the economic results from the third quarter of this year would signal a more definite slowdown for the global economy. Instead, the initial results that we have seen for the third quarter have been a little better than expected. Nevertheless, there are concerns that this is just the calm before the storm, or the last vestiges of growth before a recession takes hold of the global economy.

- Despite the impact of its zero-Covid policy, China’s economy beat expectations in the third quarter, expanding by 3.9% on a year-on-year basis. Nevertheless, there were concerns that the insistence of the Chinese government to maintain its zero-Covid policy could prevent a stronger recovery for the Chinese economy in the coming months.

- The United States economy also recorded a higher rate of growth in the third quarter than had been expected, bringing a temporary end to the downturn from the first half of 2022. While the housing market weakened and consumer spending growth slowed, export growth accelerated, and this could help the US to avoid a severe slump. 

- European economies had been recovering from their sharp declines during the height of the Covid-19 pandemic, but this recovery has been jeopardized by soaring energy prices in Europe. Some European economies (Spain, Italy and the United Kingdom) grew faster than expected in the third quarter, while others (France and Germany) did not expand as much as they had anticipated.

 

Looking Ahead

- The relatively positive economic results from the third quarter of this year were welcome news, but unfortunately, a slowdown is approaching for most major economies. This slowdown should be relatively mild, but the possibility for a more pronounced downturn in some regions remains in place due to the threat of external shocks, mainly from inflation.