Global Economics Intelligence executive summary, November 2022

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Many global economic indicators for October and November pointed to slower growth or contraction, as central banks continue to raise policy interest rates in the battle against inflation. Forecasting institutions are trimming growth projections, citing a number of challenges, including policy tightening, inflation, Russia’s invasion of Ukraine, and ongoing disruptions related to the COVID-19 pandemic. In October, for example, the International Monetary Fund (IMF) estimated global GDP growth would be 3.2% in 2022 and slow to 2.7% in 2023. For the major economies in 2023, the IMF’s GDP growth estimates range from 4.4% for China to a contraction of –0.3% for Germany. The US economy is expected to expand by 1% in 2023.

The current policy interest rates of the US Federal Reserve (3.75–4.0%), the European Central Bank (1.50–2.25%), and the Bank of England (3.0%) all reflect repeated rate rises of 75 basis points, including one in November. Each institution is expected to make a final, possibly smaller, rate hike before the new year. The tightening is intended to manage inflation toward 2% targets. At the moment, the United States is experiencing “disinflation”—the period when prices are still climbing but at a slowing pace. From a 40-year high of 9.1% in June, the US consumer price index has slowed each month, reaching 7.7% in October. In the eurozone, inflation slowed to 10.0% in November from October’s record high of 10.6%; in the United Kingdom, inflation reached 11.1%, a 41-year high.

Recent signs suggest, however, that absent unforeseen shocks, inflation may have peaked. Wholesale energy and food prices—the major inflation drivers—have come down sharply from earlier spikes. Inflationary dynamics are not evaporating quickly, but the price of oil (Brent crude) declined to $83 per barrel at the end of November. Natural gas prices in Europe are still twice the prewar level but have fallen below €150 per megawatt hour (Dutch front-month futures) from an August peak of €340.

On a country-by-country basis, European governments have offered support to households and businesses in meeting their energy costs. The new UK government under Prime Minister Rishi Sunak, for example, will make a ₤400 payment in six monthly installments; Italy and Spain are offering similar programs. In view of its greater initial dependence on Russian natural gas, Germany has in place a plan to ensure that households and small and medium-size enterprises pay no more than €0.12 per kilowatt-hour (€120 per megawatt hour) for the first 80% of their gas bills for 14 months; large businesses would pay €0.068 for the first 70% for 16 months.

The FAO Food Price Index has eased to 135.7 in November. The peak reading was 159.7 in March, immediately following Russia’s invasion of Ukraine. Food prices are still high, however, and the current reading is still one-third higher than prewar or prepandemic levels.

Logistics congestion, another factor in inflation, is slowly clearing, as shown by the New York Federal Reserve’s Global Supply Chain Pressure Index. While in prepandemic terms the reading is still high at 1.0 (0.89 in September), it has fallen sharply from peaks above 4.0 in December 2021. Trade data (a lagging indicator) show stable levels in September but a slowdown in October. As measured by the CPB World Trade Monitor, trade volumes improved in September (0.1%) and August (0.8%). Recent data from the Container Throughput Index, however, show a retreat in October, with an index reading of 120.8 (124.2 in September), as throughput slowed in China and Northern Europe (Exhibit 1).


Sea freight rates, meanwhile, have remained historically high through the pandemic. Rates are highest (but declining) in China and India; they are not as high in the United States and Europe (but are climbing). Consumer confidence mainly worsened in October, as measured by the OECD. Readings dropped in the composite global index and also in most surveyed individual economies, with the United Kingdom and eurozone showing the most downward movement (Exhibit 2). Only Brazil and India showed improvement. Consumer spending was also down in October in most surveyed economies; exceptions were Brazil and Great Britain. The OECD’s composite leading indicators likewise lost ground in October, reflecting the softening economic environment.


Manufacturing is in a mild contraction, on average, worldwide. The JPMorgan global purchasing managers’ index (PMI) had a reading of 48.8 in November, below the expansion threshold of 50. The sector has been in a slow-motion retreat since May’s expansionary reading of 52.3. In services, this indicator showed a mild expansion in October, at 49.2. Individual PMIs show softer expansion or contraction, outside of India, where the manufacturing and services PMIs improved to robust readings of 55.7 and 56.4, respectively. Brazil’s PMIs retreated markedly in November—the manufacturing index to 44.3 (50.8 in October) and the services PMI to 51.4 (54.0 in October).

In the United States, both PMIs show contraction. At 47.7, the manufacturing index measured the first contraction since June 2020; both output and new orders declined. The US services index was 46.2, making November the fifth month of contraction. The manufacturing PMIs have been in contraction in the eurozone since July and since August in the United Kingdom, where the services PMI also registered contraction, in both October and November, for the first time since February 2021.

Unemployment rates remained low in most surveyed economies in October; the indicator declined in Brazil (to 8.7%) and India (to 6.4%). In the US, where the official unemployment rate held at 3.7% in November, 263,000 jobs were added, considerably more than analysts had expected.

Stock indexes, especially in developed economies, came back strong in November, after October losses. In the US economy, the Dow Jones and S&P 500 indexes gained 20% and 12%, respectively, over both months. The tech-heavy Nasdaq index posted net losses in the two months. The volatility index for equities, meanwhile, remains slightly above historical norms.

Inflation expectations implied in the yield spreads of US Treasuries remain in the range of 2.3% to 2.5%, close to the Federal Reserve’s 2.0% target (Exhibit 3). In November the US dollar reversed direction, depreciating against many currencies; the pound reached $1.20 and the euro $1.04. Government bond yields continued to climb in November as interest rates rose.


A number of important international conferences took place in November. The COP27 climate summit concluded in Egypt with a framework for “loss and damage” compensation, by which developing countries most damaged by the effects of climate change would receive aid. Critics of COP27 say that not enough is being done to start the energy transition from fossil fuels, including petroleum and natural gas as well as coal. They cite International Energy Agency statistics showing that energy-related greenhouse-gas emissions totaled 36.3 billion metric tons in 2021, a record level.

On November 14, Presidents Xi Jinping and Joe Biden met in Bali, Indonesia, in advance of the G-20 summit there. The two presidents discussed the need to achieve greater stability in China–US relations, to manage competition responsibly, and to deepen cooperation in resolving global challenges.

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