Inflation, supply chain turmoil, and Omicron will slow global growth in 2022: UN Report


In 2021, the global economy experienced rapid growth not seen in 40 years, but prolonged supply chain constraints, rising inflation, and a wave of COVID-19 infections.

“The world economy shrank by 3.4% in 2020, followed by an expansion of 5.5% in 2021, and after showing the highest growth rate in more than 40 years, the world economy will be 4% in 2022 and 3.5 in 2023. % Growth is projected. ”According to the global economic situation and outlook 2022 Report It was released on Thursday.

Even as the global economy begins to recover from the blockades and restrictions of the pandemic era, the free flow of commerce and industry has prevented workers from returning to the office, and the emergence of Omicron variants that have contributed to logistics constraints. Remains vulnerable by.

“The short-term global growth outlook faces the great risk of an unending pandemic. Human and economic casualties are expected to increase as new waves of infection spread rapidly. “The report states.

Strong consumer spending and increased investment have spurred growth after a considerable period of inactivity. Trade has now bounced back to exceed pre-pandemic levels. However, the impact of financial and fiscal restrictions will hinder future growth in major economies.

The Fed’s tapering of asset purchases and interest rate hikes to curb US high inflation for nearly 40 years will impact local trade and international trade. As credit acquisition becomes more difficult, companies start spending conservatively, curbing chain reactions across the market.

“Increased inflationary pressures in major developed and many large developing countries represent an additional risk to recovery. Global headline inflation rose to an estimated 5.2% in 2021 and has been 10 in the past. It exceeds the annual trend rate by more than 2%, “the report said.

The organization warned of sudden and unexpected changes in monetary policy that would adversely affect emerging economies such as financial instability, currency depreciation and rapid inflation.

The agency said the number of people in absolute poverty will drop to 876 million this year as poverty rates are expected to fall in East and South Asia. By 2023, the number of poor people in Africa is expected to increase due to delayed recovery of employment levels and inadequate fiscal reforms.

The United Nations predicts that if Omicron does not cause major turmoil, “world trade in goods and services will grow 11% in 2021 and then 5.7% in 2022.” Global investment has grown to 7.5%, but organizations have pointed out “massive fiscal stimulus and ultra-loose monetary policy,” which cannot be sustained for long periods of time.

US growth will slow to about 3.5% in 2022. Recovery driven primarily by disposable income from fiscal stimulus will lose momentum in combination with high inflation levels associated with financial regulation. Supply chain crises and shortages of key materials such as semiconductors will accelerate the economic slowdown.

As for the European Union, “another wave of pandemics has prompted the reintroduction of containment measures that have disrupted the activities of many service sectors.” Inflation has risen, but the European Central Bank is estimated to maintain low interest rates until 2023. This year’s growth rate will settle at 3.9%.

The ultra-strict pandemic protocol will slow China’s growth this year from 7.8% in 2021 to about 5.2%. Market cooling and temporary electricity distribution to phase out fossil fuels weighed on investment. “

Naveen Athrappully

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Naveen Athrappully is a news reporter covering business and global events in The Epoch Times.

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