Chart of the Week: Euro area escapes the cost-of-living crisis and returns to growth

According to the flash estimate released on 31 July, the euro area returned to growth during the second quarter of this year, with economic activity increasing by 0.3%. In our latest Global Outlook Summer 2023, finalised early June, we changed one of our key calls and we no longer anticipate a global recession this year. The sharpest falls in real wages are now behind us and, in the US, real wages are rising. With a few exceptions, most major economies look to have navigated through the cost-of-living crisis while avoiding a period of economic contraction. They have dodged one bullet, but there are two more in the chamber. We are yet to see the full effects of the policy tightening that is already in place and, in some countries, most notably the UK, there is potentially much more to come.

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