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Section 3
2022 investment outlook Key themes: Global economic growth is set to moderate on withdrawal of stimulus • Interest rates to keep returning to normal on elevated global inflation • The US dollar is expected to appreciate against major currencies
Global economic growth is set to moderate in 2022 on withdrawal of stimulus Following a robust recovery in 2021, global economic growth is set to moderate in 2022 as the stimulus is pared back across major economies. Global economic growth is expected to moderate by a full percentage point to 4.4% in 2022 from 5.9% in 2021. Advanced economies will slow down to 4.5% from 5.0%, with the US and the UK’s economic growth moderating to 4.0% and 4.7%. The Euro area’s growth will moderate to 3.9% from 5.2%. Emerging markets are expected to have a bigger contribution in this slowdown, with a growth of 4.8% in 2022 from 6.5% in the prior year. Brazil, Russia and South Africa are expected to moderate significantly in 2022, to 2.8%, 0.3% and 1.9% from above potential growth rates of 4.7%, 4.5%, and 4.6% in 2021 respectively. China will also see growth moderate to 4.8% from 8.1%.
Headwinds for the global economy, emerging markets and developing economies, and financial markets are:
the US Fed’s withdrawal of its asset purchase programme and interest rate hiking cycle
Omicron
China’s growth slowdown
However, should China stimulate its economy by further relaxing credit-lending standards, this will likely offset these headwinds to the benefit of emerging markets and the global economy.
