Recent monthly data from the advanced economies have tended to exceed analysts’ gloomy expectations. This is partly due to an easing of supply shortages, which could offer some further support to output and spending in the near term. However, this resilience probably also reflects a lag before higher interest rates transmit to the economy and firms are forced to reduce employment. So while the risks to our near term forecasts have shifted to the upside, we still expect widespread recessions next year.
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