We’re all hoping 2022 will see the pandemic decline — all the COVID restrictions around the world lifted, as the WHO proposed, and the global economy starting to recover.
Yet, unfortunately, the situation does not really give cause for optimism, says Artyom Deyev, head of analytics at AMarkets. Disrupted supply chains and factory shutdowns around the world, rising energy costs, global inflation, the global chip shortage — all these problems are unlikely to be resolved quickly.
Consumer demand has also plummeted due to shrinking household incomes; business loan interest rates are rising, limiting manufacturers’ ability to boost capacity.
Inflation has surged to record highs in developed countries meaning that bank rates will rise soon. This will lead to additional problems in emerging markets including Russia — investors may start leaving those markets and national currencies may devalue.
“All these processes add up to a situation known as stagflation (high inflation and unemployment accompanying an economic slowdown). It is a global process, which is gaining scale now,” the expert explained to Invest Foresight.
Black swans (unexpected crises) are called so exactly because they are impossible to foresee, Artyom Deyev adds. No one could have expected the coronavirus pandemic in 2020 or imagined where it could lead. This means anything can happen — more geopolitical tensions, a war (hopefully a local one), a new infection or a global natural disaster, anything.
This crisis we are struggling with has been provoked by the pandemic and related restrictive measures. But the imbalances and contradictions had been accumulating in the global economy for years; such a wicked tangle of problems cannot clear up without a major crisis.
“A global financial and economic crisis is here now, it is already underway, although it has not yet reached its most acute phase,” the analyst believes, “but almost everyone from the Fed and the IMF to the World Bank and the United Nations seems to agree it could peak in 2022.”