Global Economic Outlook: Expect the Unexpected

The Northern Trust Economics team shares its outlook for major markets in the months ahead.

Forecasting economic outcomes is a challenging exercise, even under steady conditions. Geopolitical events have only added to the complexity facing economies worldwide.

The situation in Israel is rapidly unfolding, and remains much more of a humanitarian crisis than an economic one. The involved nations are fairly insular, and the conflict has not yet altered our forecasts. The economic risk vector will be through oil prices; should the conflict spread to other oil-exporting nations, the global economy could experience another round of energy-led inflation, raising recession risks.

The shock comes just as many economies are entering a delicate interval. Slower consumption is adding to recession risks, inflation is on an unevenly downward path, and labor markets are still tight. Higher interest rates are supporting central banks in their objective of economic cooling. Risks were skewed to the downside even before the Middle East conflict, and uncertainty is only higher now.

Here are our up-to-date perspectives on how major economies are poised to perform during this year and next.