2021 was a year of highs and lows, rounding up with promising indicators of economic recovery and global reopening on the horizon. As we enter into an even more exciting year, what are the important keywords set to dominate the headlines in 2022?
Here are some of the areas that I will be paying close attention to:
Monetary Tightening Cycle:
Starting from the last quarter of 2021, the Federal Reserve has indicated that its run of ultra-easy policy since the beginning of the pandemic will be coming to a close. For one, the central bank said it will accelerate the reduction of its monthly bond purchases. These moves came in response to escalating inflation, which is running at its highest level in 39 years for consumer prices.1 This will no doubt put pressure on other central banks as well. Interest rate hikes are likely to happen; the question is not simply ‘how much’ but also ‘how many’.
Supply Chain Situation:
The gradual reopening of country borders may have helped to ease labour market shortages, but supply chain tensions looks set to stick around for longer. The supply chain frustration actually forms part of a larger global resources disruption that affects production and business investment. The supply chain challenge goes beyond a short-term issue; there will be impact in the long run.
With China’s property giant Evergrande facing an unprecedented debt crisis and the sweeping crackdowns on tech causing market unrest, what does this spell for China’s (and the world’s) economic performance as we move forward? All eyes are on one of the biggest contributors to global growth. China’s transition may present risks for investors; it is important to stay aware and on high alert.
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