In 2022, the global economy will continue to recover. However, there are a number of factors that can interfere with recovery. Among the main risks: a new strain of coronavirus, inflation, curtailment of business support in the United States, slowdown in China’s growth, and more, writes Bloomberg.
New strain of coronavirus
However, the new strain may be more infectious and deadly. According to analysts, a return to strict restrictions even for three months is fraught with a slowdown in economic growth in 2022 to 4.2%.
Over the year, inflation in the United States rose from 2% to 7%. Analysts believe that the rise in prices is stimulating the demand for gas, the aggravation of the situation in relations between Russia and Ukraine and, of course, the very recovery of the economy.
Tough Fed policy
According to analysts’ forecasts, if the regulator raises the rate three times and announces its readiness to reach 2.5%, then in 2023 a recession is possible in the United States.
Slowdown in China
The growth of the Chinese economy in 2022 risks slowing down to 3% against the expected 5.7%. This will lead to a “domino effect”, analysts say. As there is “zero tolerance” to the coronavirus regardless of the strain, the impact of the real estate crisis is also ignored.
Political upheavals in Europe
The upcoming elections in Italy and France do not give confidence. If the Eurosceptics win, the price of borrowing for these countries will rise, and a recession may ensue in the sovereign sovereign debt spread of 300 basis points.
Minimizing emergency stimuli
In 2022, UBS estimates that governments will scale back support by about 2.5% of global GDP. This factor will especially affect the economies of Japan, Canada, Italy and the UK.
Subsidence of emerging economies
A Fed rate hike usually raises the dollar. This causes capital outflows and sometimes currency crises in developing countries. In 2013 and 2018, Argentina, South Africa and Turkey were hit hardest by this.
Rising food prices
The food availability situation could worsen markedly even compared to the Arab spring of 2011, especially in countries such as Sudan, Lebanon and Algeria.
Consequences of Brexit
Analysts predict a full-scale “trade war” between the EU and the UK is unlikely. However, this does not exclude problems at the customs borders. This, in turn, can lead to an increase in consumer prices.
The escalation around Taiwan could also have a negative impact on the global economy. The agency calls the “war of the superpowers” the worst scenario. In other scenarios, we are talking about sanctions that could freeze ties between China and the United States.