Outlook 2022: Paul O’Connor (Janus Henderson Investors)
By Paul O’Connor, Head of Multi-Asset at Janus Henderson Investors
What is the economic outlook for 2022?
‘The year ends with the global economy transitioning from the strongest phase of the pandemic recovery into a more complicated economic environment. The big picture for 2022 is one of another year of robust growth, albeit with notable regional differences and significant uncertainty surrounding inflation dynamics.
Impressive progress on vaccinations and COVID-19 treatments should keep the major European countries and the USA on the path to a continued reopening of their economies. Households in these regions have accumulated sizeable savings balances over the pandemic, which should support significant pent-up demand for services.
Corporates too are likely to be a decent source of growth in the months ahead, as they look to rebuild inventories and raise investment expenditure in many industries.
The outlook for the emerging economies looks more varied, with continued strong growth in India, contrasting with more muted expectations for Brazil and other emerging economies, where central banks are raising interest rates to fight inflation. The rapidly deteriorating health of many Chinese property developers looks sure to cast a long shadow over the outlook for Chinese growth well into 2022.
This year’s surge in goods inflation looks set to fade in the months ahead as bottlenecks ease in many industrial sectors. This should allow central banks to proceed very slowly with winding down asset purchases and raising interest rates. A sustained uplift in service sector inflation and wage growth are the key risks to this benign policy outlook.’
The year ends with the global economy transitioning from the strongest phase of the pandemic recovery into a more complicated economic environment.