The Q2 Global Economic Conditions Survey (GECS) points to a decisive deterioration in the global economic outlook. Capturing the effects of war in Ukraine and the surge in inflation across much of the world, all the main global indicators fell in the Q2 survey, conducted in mid-June (Chart 1). The drop in global confidence is especially sharp, although the level remains above the low-point reached at the height of the Covid-19 pandemic. Indicators more closely related to economic activity – orders, employment and capital spending, also fell in Q2 but more modestly than confidence. The conclusion from this GECS is that, while the risks of a global recession have risen, the most likely outcome is one of weak growth for the rest of this year.

The two ‘fear’ indices – reflecting level of concern that customers and suppliers may go out of business – were little changed in the Q2 survey, both edging slightly higher.

Both indices have fallen back from the extreme levels seen in 2020, but are still above pre-pandemic levels (Chart 2).