High inflation continues this year, hindering global growth: Reuters polls


Continuing high inflation will put a damper on the global economy for the rest of 2022, according to a January 28 Reuters poll of 500 economists covering 46 economies.

Analysts interviewed said they are curtailing global growth prospects, fearing the risk of slowing demand and spikes in interest rates.

Many economists, along with central banks, are blinded by the surge in inflation, and worsening outlooks are lowering global growth forecasts.

Their previous assessment three months ago assumed that inflation partially caused by a pandemic-related supply crisis was only temporary.

Omicron is hampering short-term growth and putting sustained price pressure on consumers and businesses, but economists are optimistic that price pressure will ease by 2023.

Global markets are volatile this week as central banks are moving their goals to control inflation.

The Federal Reserve Board on January 26 showed that it could raise interest rates in March and reaffirmed its plans to end pandemic bond purchases before significantly reducing asset holdings. ..

The federal funds rate, which has been at a record low of 0-0.25% since the pandemic, will be raised to mitigate inflation.

The Bank of England has already raised interest rates on December 16th and will raise them again.

The Bank of Canada has stated that it will maintain the policy rate for now, Hiking immediately..

Foreign investors see Communist China as a safe haven from inflation in 2022. This is because China is seeing a strong net influx of foreign countries.

On the other hand, central banks in small regional economies rely on the Fed’s actions while struggling with pandemics and their own economic problems.

In contrast, the European Central Bank and the Bank of Japan are not expected to be upset until the end of next year after announcing more cautious policy changes.

The global economy is expected to slow to 4.3% growth in 2022, after expanding 5.8% from the previous forecast of 4.5% in October last year.

Growth is estimated to slow further to 3.6% and 3.2% in 2023 and 2024, respectively, mainly due to rising interest rates and living costs.

Most countries expect growth to decline in the fourth quarter of 2021 and the first quarter of 2022, but will recover in the second quarter due to the prevalence of Omicron variants.

Friday’s global market fell again as investors continued to worry about future signals from central banks and tensions between NATO and Russia increased, making it one of the worst starts of the new year for equities.

Brian Jung

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Brian S. Jung is from New York City and is a resident with a background in the political and legal industry. He graduated from Binghamton University.