2022 will be marked by the continuing recovery of the global economy, although at a slower pace, with sectors such as pharmaceuticals and transport equipment witnessing strong growth on the back of high demand for vaccines, drugs and mobility. Unemployment rates continue to drop, reflecting a robust demand for workers in many parts of the world. Global cities will also emerge from the pandemic, with a strong shift towards smart and digitally connected metropoles. Climate action will continue to shape business agendas in the year to come.
Euromonitor International’s latest report Economies in 2022 highlights some key trends from economy, industrial, cities, business dynamics and sustainability perspectives for businesses to consider in 2022.
Global Economies Landscape in 2022
Source: Euromonitor International Macro Model/Voice of the Industry: COVID-19 survey, 2021; ILO/National statistics/ Eurostat/UN/OECD
Note: Data for 2021 and beyond are forecasts
Pandemic-related risks continue to challenge the global economy
As the fastest pace of recovery is already over, the global economy is expected to expand by 4.6% in 2022 (down from 5.7% in 2021) under Euromonitor International’s baseline forecast, due to continued medical improvements and a consumption boost from pent-up demand. The COVID-19 pandemic will continue to represent a major risk to global economic growth in 2022, as insufficient vaccinations in both advanced and developing economies and new infection waves, coupled with the emergence of a new variant, Omicron, have led to renewed tightening of social distancing restrictions in many economies at the end of 2021. If supply chain disruptions and high inflationary pressures continue in 2022, global production and consumption will be affected, undermining global economic recovery. Under Euromonitor International’s pessimistic scenario (C19 Pessimistic1), global real GDP growth will stagnate in 2022 and will only return to growth in 2023.
Global supply chain to recover, but pressures remain
Global supply chains are forecast to recover in 2022 as global production value in the manufacturing sector is set to reach pre-pandemic levels. Economic recovery, construction projects, government stimulus and strong consumption growth are expected to support the manufacturing sector’s faster expansion. Countries in the Asia Pacific region, including China, India, South Korea and Taiwan, are predicted to show the fastest recovery due to sustained consumer income growth and rising global demand for high-tech goods.
Source: Euromonitor International from national statistics/trade sources
Note: Data from 2021 are forecasts.
Despite improving production output, global logistics problems are expected to prevail in 2022. Worker shortage, insufficient port capacity and shipping capacity limitations will place pressure on logistics networks and take longer to resolve. In addition, mounting problems in China’s construction sector could result in weaker economic growth and hurt the manufacturing sector.
Hybrid work model to stay
The pandemic has fostered a global shift towards remote work expansion, calling businesses to invest more in online collaboration tools such as MS Teams, Zoom and Skype. According to Euromonitor International's Voice of the Industry Survey conducted in April 2021, more than half of companies globally provided new digital communication tools to facilitate remote working, while nearly 70% of industry specialists globally indicated plans to expand remote working opportunities to prevent operational disruptions in the future. Many employers plan to continue to observe a hybrid work model once the threat of the pandemic has waned, permitting work from home at least several days a week.
Cities to ramp up 5G rollout
The rollout of 5G internet will continue to gather pace in 2022 as national and municipal governments accelerate the implementation of smart and digitally connected cities. Big data is becoming the backbone of decision-making, instigated by the growing number of Internet of Things (IoT) devices being embedded in city assets, and 5G is the platform through which smart cities can be better achieved due to several advantages including larger bandwidth, lower latencies and better coverage. Faster rollout of 5G internet will give a boost to technologies such as connected cars, autonomous vehicles and smart buildings that address critical challenges in urban areas including sustainability, traffic congestion, and urban planning.
Business climate action to gain pace
Businesses are ramping up climate action, whether improving energy efficiency, switching to renewable energy, electrifying their fleets, or innovating in climate-friendly products and technologies. Climate advocacy is becoming part of the corporate speech, with big players announcing commitments to decarbonise their supply chains and operations. According to Euromonitor International’s Voice of the Industry survey in 2021, an increasing number of businesses (43.2%) are investing in sustainability to build resilience to unexpected risks compared to 2020 (31.3%), and this trend is expected to continue throughout 2022. Decarbonisation goals will continue to challenge companies, but in the meantime, will create vast business and investment opportunities.
For more analysis please read Euromonitor International’s full report, Economies in 2022