ING global economic outlook 2023 December 2022 The second big question for us is: how fast will inflation slow? It is core inflation that has shown a surprise to the upside in recent months and that remains our baseline scenario for next year. It will be very difficult for central banks to find a way through this minefield of seemingly slowing headline inflation with resistant core inflation hiding the inflationary essence of the CEE region, which was here with us even before the energy crisis and even before the Covid years. 3 Tight labour market despite recession For next year, our baseline scenario is a shallow recession or, at best, economic stagnation across the region. However, we also expect the unemployment rate to rise only symbolically while wage growth remains in double digits in most cases, but of course, it's still negative in real terms. Labour shortages are one of the main barriers to growth in the region, and the migration crisis, which has boosted labour supply in Poland and the Czech Republic, in particular, has not changed this. In addition, governments across the region are playing a strong role here, still actively supporting households in the midst of the energy crisis. One channel is the minimum wage hikes we see across the region supporting the mentioned strong wage growth, which is one of the reasons for the persistence of core inflation and underlines the dilemma central banks will face in 2023.