As 2021 draws to a close, the year where things were supposed to ‘return to normal’ produced surprising twists and turns along the way. Not many would have ever imagined the headlines jumping from Ever Given to Evergrande, as 2021 also saw the social and economic foothold of DeFi take over the masses. We saw developments in the tech space, from Meta to the Metaverse, creating much hype around the eventual creation of a fully digital economy. Of course, a trip in retrospect is never complete without mentioning the Delta variant, and its subsequent impact on supply chains. Indeed, the legacy of the global material crunch is still feeding into higher consumer prices around the world, as economies continue to grapple with inflationary highs. It’s been a tumultuous year in the policy sphere as well. AUKUS lit a dangerous flare that threatens to further isolate East and West, while COP26 disappointed many who felt it fell short of robust action necessary for our environment.
So with all that said, can 2022 outdo its predecessor? In short, there is much to look forward to (or not) in 2022. With the ongoing development of Omicron, it will be important to measure and curb its effects, lest another hit to spending, growth and supply chains. The raging debate between the transitory and permanent inflationists wages on, as the future of prices will determine policy directions for economies over the year. Controlling the non-transitory elements of inflation will be crucial to ensure a stable adjustment in growth, with a failure to do so expected to induce recessionary conditions in 2023 and 2024. Price fretting aside, economists predict a surge of 4.7% in global growth in 2022, driven by recovering supply chains, strong Asian markets, returning participation rates and accommodative tightening. China and India are expected to continue their growth trends, the former forecast to overtake the US in GDP by 2030. The UK is on track to be 16% larger than France in 2036 despite Brexit, and Germany will outpace Japan in 2033 based on CEBR estimates. All this is expected to occur against a backdrop of ongoing climate challenges becoming increasingly urgent. Along with the uncertainties and unknowns, 2022 will be an important year of further recovery and normalisation for most economies.
