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Key drivers of our current economic assessments

March 10, 2022

As oil prices rise and conditions tighten, global growth slows and inflation accelerates
The table lays out four Vanguard scenarios of global economic effects of war in Ukraine. In the baseline scenario, oil prices range from $85 to $95, financial conditions are accommodative, 2022 GDP growth is well above trend, and 2022 average consumer price inflation is between 4% and 5%. We ascribe a 10% likelihood to this scenario. In Scenario 1, oil prices range from $95 to $105, there is limited tightening of financial conditions, 2022 GDP growth is above trend, and 2022 average consumer price inflation is between 5% and 6%. We ascribe a 35% likelihood to this scenario. In Scenario 2, oil prices range from $105 to $130, there is moderate tightening of financial conditions, 2022 GDP growth is below trend, and 2022 average consumer price inflation is between 6% and 8%. We ascribe a 35% likelihood to this scenario. In Scenario 3, oil prices range from $130 to $170, there is significant tightening of financial conditions, economies fall into recession, and 2022 average consumer price inflation is between 8% and 10%. We ascribe a 20% likelihood to this scenario.
Scenarios make sense today and every day
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