Following the recovery in 2021, the outlook for economic activity around the world is increasingly bleak. The global outlook for the second quarter of 2022 is marked by the slowdown in China, the escalation of the Russia-Ukraine conflict, the energy crisis and rising inflation. Most central banks are responding to the latter with various instruments of monetary tightening. The increasingly tightening monetary environment, however, is holding back growth, without having a real impact on inflation developments in the short run. For economies with high indebtedness, monetary tightening and rising government bond yields are making financing more difficult, and this is narrowing the room for manoeuvre for fiscal policy. Hence, in the current period, neither monetary nor fiscal policy will be as supportive as it was during the pandemic.

A summary of the study is available in English here.