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The war in Ukraine has put pressure on European corporate margins. The conflict has sent (energy) commodity prices soaring, amplified existing supply-chain disruptions and increased uncertainty weighing on investment.
With provinces accounting for nearly a quarter of GDP under partial or full lockdown, the cost of China’s zero-Covid policy is climbing. We expect that omicron outbreaks in Q1 and April will have cost -0.4pp of GDP growth in 2022.
The flattening (and partially inverted) US yield curve is signaling rising recession fears. There are signs that a rapid hiking cycle could narrow the window for a “soft landing” as a slowing economy amid elevated energy prices makes a recession increasingly probable.