Reuters: Global hyperinflation likely to last through 2027, and price pressures to remain unabated

A Reuters survey found the global economy is at an all-time highinflation This phenomenon is likely to continue into next year. Economists are concerned that in addition to the Middle East conflict increasing energy costs, price pressures will persist and even become a deep-rooted problem.

According to surveys, global investment in artificial intelligence (AI) technology has exceeded US$1 trillion since last year. While cost-of-living pressures are reducing household spending and affecting the political situation of different countries, these investments have also allowed some economies to show greater resilience.

most ofCentral bank So far, interest rates have been raised only a few times, or not at all, but if inflationary pressures continue to rise, interest rates may rise further in the future. Global bond markets have suffered a massive selloff in recent months, with rising yields as financial conditions have tightened.

Crude oil prices have remained above $100 a barrel since October 7, hitting a six-month high last week and above $117. In the nearly eight months since the United States and Israel launched joint airstrikes against Iran, crude oil prices have surged more than 60%.

Reuters interviewed more than 500 economists from around the world this month. Of the 50 economies, they raised their inflation forecasts for 31 economies in 2027 and revised their growth forecasts for 23 economies.

Of the 21 developed economies, economists have raised their 2027 inflation forecasts for 15 of them, showing that inflation concerns are gradually rising, affecting even economies that typically have low price pressures.

Overall, surveys over the past three quarters show that the average forecasts for inflation in 2027 have increased by 0.7 percentage points in the UK, by 0.5 percentage points in the Eurozone, while in the United States it has increased by only 0.2 percentage points so far; India increased by 0.4 percentage points, and Brazil increased by 0.5 percentage points.

Janet Henry, HSBC’s global chief economist, said: “I am even more worried about this. The longer the situation in the Middle East continues and heats up, and the more all kinds of price pressures accumulate, the more likely it is that inflation will not only rise further, but last longer.”

Seth Carpenter, global chief economist at Morgan Stanley, said in the report: “Rising energy prices are weighing on the global economy, but global economic activity still shows resilience, supported by an AI-driven investment cycle and better-than-expected economic performance in many sectors.”

The impact of rising prices on household budgets has become a main issue in election campaigns in many countries around the world. Polls show voters are paying particular attention to such issues ahead of the US midterm elections on November 3. The focus of the Brazilian presidential election also revolved around the issue of cost of living, which current President Luiz Inácio Lula da Silva has taken advantage of to win his fourth term.

While surveys in April and July showed weak economic growth and extremely high inflation, the latest survey favors a different scenario, including price pressures coupled with strong economic performance.

Economists in the July survey revised up their global economic growth forecasts for this year and next year to 3.0% and 3.2% from 2.9% and 3.1%, respectively. However, the forecast for 2027 is still lower than the International Monetary Fund’s (IMF) forecast of 3.4%.

The United States leads the world in AI capital spending, and such spending has now become a major driver of domestic economic growth. Economists predict the US economy will grow 2.3% this year and 2.1% in 2027.