KUALA LUMPUR (Jan 25): Global growth is projected to slow to 4.2% in 2022, slightly below last month’s forecast owing to weaker performances in Western Europe, North America, mainland China and Japan.
The IHS Markit January Global Economic Forecast Update released on Tuesday (Jan 25) said that just as the rebound in 2021 was broadly based, most regions will experience a deceleration in 2022.
The report added that a notable exception is the Middle East and North Africa, where higher oil export revenues will spark a pickup in growth.
IHS Markit said global real gross domestic product (GDP) growth will settle to 3.4% in 2023 and 3.1% in 2024 as fiscal and monetary policies tighten and pent-up consumer demand is satisfied.
IHS Markit global economics executive director Sara Johnson noted that global economic expansion will continue at a moderating pace in 2022 and 2023 alongside a transition from the Covid-19 pandemic to endemic.
“With supply disruptions continuing, inflation will remain elevated in the months ahead, leading to monetary policy tightening.
“As demand growth cools and supply chain problems are gradually resolved, inflation will subside,” she said.
Johnson added that with shipping bottlenecks and some critical supply shortages persisting, global price inflation will remain high in 2022.
She said global consumer price inflation reached 5.2% year-on-year in November and December 2021, its highest pace since September 2008.
“Worldwide inflation will likely remain near 5% in early 2022 before gradually easing in response to declines in industrial and agricultural commodity prices.
“On an annual basis, global consumer price inflation picked up from 2.2% in 2020 to 3.8% in 2021 and will average 4.1% in 2022 before subsiding to 2.8% in 2023.
“Risks to the inflation outlook are concentrated on the upside,” she noted.
Asia-Pacific will lead global economic growth
Meanwhile, IHS Markit said the Regional Comprehensive Economic Partnership (RCEP) took effect on Jan 1, 2022 for the countries that had ratified the agreement — China, Japan, South Korea, Australia, New Zealand, Singapore, Thailand, Vietnam, Cambodia, Brunei and Laos.
It noted that an important advantage of the RCEP is its favorable rules of origin, which will provide cumulative benefits along manufacturing supply chains.
The firm said this will help to attract foreign direct investment in manufacturing and infrastructure projects in its member nations.
It added that after a mild 1% decline in 2020 and 6% growth in 2021, Asia-Pacific’s real GDP is projected to expand 4.8% in 2022 and 4.5% in 2023.
Source : The Edge Markets