2021 will be remembered as the year of economic reactivation and the beginning of the end of the pandemic, but also as the year in which inflation returned to our lives after two decades of absence.
The year began with a high level of uncertainty, but also of hope with the arrival of vaccines. Although the global economy experienced a strong rebound, the recovery was very uneven. This was because vaccination efforts, economic stimulus policies, and restrictions on social mobility varied dramatically by region.
The strong rebound in global consumption – driven by fiscal and monetary stimulus measures in developed countries – combined with a series of disruptions in global supply chains – generated by the diversity of restrictions on certain productive activities – caused a shortage of a large quantity of goods.
Additionally, the lack of labor in some developed countries (mainly the United States) also contributed to wage pressures that had not been seen for decades.
The combination of the strong economic rebound and the growing inflationary pressures led the main central banks of the world, led by the Fed, to advance the critical path for the beginning of the normalization of their monetary policies.
Although the arrival of the Delta variant in the summer and the inflation rebound in the second half of the year caused a slowdown in economic activity, it is estimated that global GDP may reach a 6% growth in 2021, above forecasts at the beginning of the year that stood at 5 percent.
The positive surprise was driven mainly by the United States, where GDP is estimated to reach 5.5% growth in 2021 when the original expectation was closer to 4 percent.
Meanwhile, the Eurozone grew close to the 5% forecast and the main negative surprise came from Asia, whose 7% growth was below the 8% forecast (both China and Japan underperformed).
For this 2022, specialists expect the recovery to continue, although at a slower pace, with a growth forecast for global GDP close to 5 percent.
The slowdown could be more notable in Asia – where a slowdown of 7 to 6% is expected – and in Latin America, where GDP could go from an expected growth of close to 6% in 2021 to 2% in 2022.
Although 2022 could be the year of the end of the pandemic, with Covid-19 becoming an endemic disease, it will also be the year of the withdrawal of the emergency fiscal and monetary stimuli that were pillars of the 2021 rebound.
Many economies laid the groundwork for the rebound to turn into a sustainable recovery while others simply rode the wave of the global and / or regional rebound. The most important challenge for the global economy in 2022 will be to confirm the recovery in an environment of withdrawal of stimuli and fighting inflation.
Socio Director de EP Capital, S.C.
Without Borders
Joaquín López-Dóriga Ostolaza is Managing Partner of EP Capital, SC, a consultancy specialized in mergers and acquisitions founded in 2009.
He is a graduate of the Bachelor of Economics from the Universidad Iberoamericana, where he graduated with honorable mention and the highest average of his generation. He has a Master’s degree in Economics from the London School of Economics, where he was distinguished with the British Council Chevening Scholarship Award.
Reference-www.eleconomista.com.mx