Incoming news is consistent with our forecast for a sharp downshift in global  growth momentum as we turn into the new year. We expect the US to follow  China in delivering a strong 7%ar 4Q21 GDP gain next week, but also post a  sharp decline in December real consumption that aligns with the broader  weakening in global consumer spending and sentiment into year-end (Figure  1). With case counts in Asia on the rise, the Omicron wave that disrupted the  North American and European holidays is now set to depress spending during  the region’s upcoming Lunar New Year celebrations. These indicators point to  a synchronized slowdown that looks to generate the slowest global growth of  the expansion. However, we maintain an upbeat outlook. Our current-quarter  forecast of 3%ar growth is above potential and sandwiched between projected  outcomes of stronger-than-5%ar global GDP growth in 4Q21 and 2Q22. 

A number of judgments regarding the nature of the Omicron wave underlie  this upbeat view. First, we expect the drag to be concentrated in the early  months of the year as the variant spreads quickly. In addition, we anticipate its  reduced virulence will combine with a more targeted policy response to limit  supply disruptions. Our focus in tracking these views is on Asia. A significant  behavioral shift toward caution is likely to take hold in the region as case  counts rise. While this is not fully incorporated in our forecasts, we expect  factory shutdowns to be limited and the gradual easing of bottlenecks now  underway to continue. Evidence from Japanese automakers and China’s ports  are thus far consistent with this view. With cases looking to have already  peaked in the US and falling in the UK, a rebound in mobility looks likely  toward the end of this quarter