FROM PANDEMIC STORM TO INFLATIONARY HEADWINDS ●
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NEWSEC PROPERTY OUTLOOK • SPRING 2022
FROM PANDEMIC STORM TO INFLATIONARY HEADWINDS Klas Eklund, Senior Economist, Mannheimer Swartling
After two years of wild swings, in 2022 the global economy was supposed to return to normalcy. However, we now face a new uncertainty: the return of inflation. Will price increases fall back or will they prove to be more persistent? The answer decides central bank actions and how much interest rates will climb. A gradual move in step with somewhat higher inflation is not problematic; it can be seen as a much-needed normalization, still from an historically low level. But a more abrupt move would cause turbulence in financial markets – and in the property sector. My view is that rates will indeed climb and create headwinds. Still, real rates will continue to stay low, since long term factors like global savings and demography will stay in place . From a fundamental perspective, property still looks like a good long-term investment, although not as spectacular as during recent years. But market uncertainty and turbulence are likely on the path to a new equilibrium.
from the pandemic with rather small economic injuries and with strong property sectors. The stage is set for a year of good growth as economies open up. Also the Baltics are now recovering quickly. But also in the Nordic/Baltic region inflation and interest rates will constitute headwinds before a new equilibrium is reached.
In the Nordic region, economies are strong. All Nordic countries emerged
Despite Delta and Omicron the economic recovery was strong in 2021.
A strong recovery
China led the way with 8 per cent GDP growth, US growth was not far behind with 6 per cent. Even the stodgy Eurozone grew by 5 per cent. The main reasons were rebounds after the horrible year 2020, and the roll-out of vaccine. Trade met disturbances as supply chains were hurt by lockdowns and lack of shipping containers. In certain sectors, e.g semiconductors, shortages caused ripple effects along several industries. Nonetheless, world trade
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