MARKET OUTLOOK
Going Forward Rasha Badawi Head of Barclays Private Bank in the UAE gives MEA Finance her thoughts on the key features and landmark achievements of 2021 and how they provide us with a glimpse into how 2022 will take shape and what some of the lead trends and considerations will be for the regional and wider global markets Rasha Badawi Head of Barclays Private Bank in the UAE
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escribe 2021 from a regional banking and finance perspective, a n d w h a t yo u fe e l was the markets’ most notable achievement.
D e s p i te re c e n t t u r b u l e n c e a n d uncertainty, there is no doubt that the global economy has strongly grown this year, even if the pace is now slowing. 2021 will go down in the economic annals as one of exceptional growth. A mixture of the improving health situation, relaxing of restrictions and ongoing aggressive policy support that allowed the global economy to expand by around 6.1% and emerging markets by 6.8%. The biggest vaccination programme in history has been the key to the surge in activity, especially in the UAE
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who is leading on global rankings for vaccination rates and where, according to government officials, at least 91 percent of the country´s population has received one dose of the vaccine and 80 per cent has taken both doses. The rapid discovery of vaccines has allowed economies to reopen and activity to resume at speed. However, this “stop and go”, on a massive scale, has created unprecedented frictions in supply chains and parts of the labour market. As a result, inflation (and increasingly stagflation) fears, as well as concerns over the path of interest rates, are at the centre of the wall of worry that investors are trying to climb. We expect these issues to dominate the narrative next year again, at least in the first half. While not eradicating the virus, the vaccines have proved to be highly
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effective in breaking the chain between case numbers and severe illness. Our expectation is that the virus will evolve to become endemic, rather than being arrested. This disruption will continue to affect growth prospects in 2022, when the world is likely to grow robustly although we acknowledge that the peak of the pandemic recovery has passed.
What is your prediction for the state of the overall regional economy by the end of next year? As the world moves on from the pandemic, 2022 is likely to be characterised by slower economic growth, higher inflation, elevated volatility, and ultimately outperformance of equities over bonds. In this uncertain environment, proper diversification and active
