The Economist has published a report on the main risks that the global economy may encounter in 2022. According to the risk outlook, there are two main factors that may derail a robust recovery of the world economy.
Curiously enough, changes in the parameters of the Fed’s monetary policy could pose the biggest threat to economic stability. If the US central bank tightens monetary policy, it is likely to hurt risk sentiment. As a result, market players will be less willing to invest in emerging markets. Besides, the strengthening of the greenback may also be a negative factor. Trade turnover will inevitably shrink due to a stronger dollar as it is often used in international settlements.
China may also adversely affect the global economy. The economic indicators of many countries are now highly vulnerable to the economic situation in China. It is the biggest consumer of aluminum, coal, cotton, soybeans, and other commodities. Therefore, the slowdown in China’s economy is sure to have unpleasant consequences for the global economy.
Even now the charts show that commodities, including oil, will keep rising on condition that demand for risk assets will remain low. Analysts also see signs of stagflation, an economic scenario where stagnation coincides with rising inflation.
