A report from the Economist Intelligence Unit has outlined themes for the world’s economy next year.
Industries in 2022 was released earlier this week. The five themes to dominate the world economy, according to its authors will be:
- Supply chain disruption lasting well into next year.
- An increase in interest rates, caused by prices remaining high.
- Challenges to regulators, along with opportunities for all, from new technology.
- Changes in tax regulation that companies will need to prepare for.
- Climate-change and emissions targets will ‘become serious’.
The EIU report said: “2021 was supposed to be a year of recovery for economies and businesses that had been affected by the coronavirus (covid-19) pandemic.
“However,” they added, “it has not been a straightforward rebound. Although coronavirus vaccines allowed many countries to ease lockdowns and begin a recovery, cases remained stubbornly high, albeit with an improved recovery rate. International borders remained either shut or subject to cumbersome testing requirements. One knock-on effect was supply-chain disruptions that hampered companies’ ability to meet consumer demand, pushing up prices. Many of these problems will persist into 2022.”
The report also predicts that while the global economic recovery will continue next year, this will be at a slower pace compared to 2021. After real GDP expansion of an estimated 5.4% this year, the EIU predicts this will drop to 4.1% in 2022.
Even this came with a caveat of danger.
The authors added: “This recovery could still be derailed if the pandemic flares up again. Persistent supply-chain disruptions could keep commodity prices elevated. This will benefit commodity-dependent countries, but will fuel inflation. That, in turn, will lead to tightening monetary policy, with impacts on stock markets, banks, companies, and governments.”
On the liability side, geopolitics raises its head in the report, with the EIU predicting an escalation in US-China tensions as the world’s biggest global risk.
It is important to note that this report was assembled and produced prior to this week, when a surge in the pandemic led to further lockdowns in Austria, with other European countries such as Germany seemingly not too far behind.