Deutsche Bank Research believes that the global economy has shifted from a demand-scarce phase in the 2010s to a supply-constrained phase. The G7 output gap has returned to near zero from its long-term negative value, indicating a lack of sufficient spare capacity to absorb additional demand. Future demand shocks such as a rebound in consumption and fiscal stimulus may result in smaller increases in actual output, while the reactions in prices and wages will be more pronounced.
