Sharp downward revision of the IMF economic growth forecast

The International Monetary Fund cut its global growth forecast yesterday to 3.6% in 2022 and 2023, down from an estimated 6.1% in 2021. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January, with a deep recession in Russia and a significant slowdown in Europe. Germany and Italy are among the most impacted countries in Europe, notably due to the high share of industry in their economic landscape and their dependency on Russian energy commodities.

In China, the central bank finally maintained its rate policy unchanged on the back of a lingering real-estate crisis while the market consensus was in favor of a cut to stimulate a faltering economy due to the impact of the zero-covid strategy.

On the agenda today, new car registrations in the EU released this morning (-20.5% yoy in March 22) confirmed the massive impact of supply chain disruptions and surging energy prices on the automotive industry. The TV debate between French President Macron and the far-right candidate Marine Le Pen this evening before the run-off planned on April 24 could either cement the expected victory of the incumbent president or reduce further the tight margin he currently holds, with probably some impact on the EURUSD rate which already sits at a two-year low and the FR-DE 10-year interest spread which shows no signs of concerns over a Le Pen victory so far.