Morgan Stanley Research: Key Forecasts: Next 12-Months Outlook: Our High-Conviction Calls

Research evidence excerpt

Morgan Stanley Research: Key Forecasts: Next 12-Months Outlook: Our High-Conviction Calls

Global Idea

June 15, 2026 08:48 PM GMTM

Morgan Stanley Research: Key Forecasts

Next 12-Months Outlook: Our High-Conviction Calls Next 12-Months Snapshot

Structural Strength vs Cyclical Weakness: The economic outlook remains constructive, though not as strong as we US data continue to benefit from a stable consumer and robust equipment

forecasted a few months ago. High energy prices have boosted inflation and weighed on growth, but structural fundamentals investment, reinforcing our view that real growth remains steady and consumption

were robust before the conflict and—so far—remain so. The energy shock is still brief, at less than three months, in economic dynamics are closely tied to inflation. We expect consumption to be soft as energy

terms. The implication being that if a resolution is imminent, some of the tail risk scenarios may have a lower probability, but weighs on disposable income but as that passes and tariff inflation passes, we see

we still need to monitor time to energy flow normalization to think about inflation implications; MS baseline economic consumption improving. At a global level, we have written about the risks to growth

and second order effects may transmit across PMIs. Euro area PMIs continued to

forecasts assumed some level of energy flow normalization by 3Q26. Europe is more exposed; as a net energy importer and

soften as services PMIs missed materially recently. In Asia, 2Q growth momentum is

without fiscal stabilizers in place, the pass-through to inflation will happen faster and the drag on growth will be great, but

holding up better than we expected. We remain constructive as we see a quick

so far, we do not see it as recessionary.