Global Economy, Finance and Trade Trends

May 2022

Slower growth, surging inflation, rising geopolitical risks and an accelerating deglobalisation trend are factors shaping the global economic, financial and trade landscape in 2022 and beyond. Despite the challenges, there are opportunities for businesses to transform, innovate and build resilience in the new economic environment. Knowing what is happening in the global economy now and in the long term will help companies to stay ahead of emerging risks and identify new business opportunities.

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Key findings

The recovering global economy faces downside risks

The global economy made a strong rebound in 2021 after a record recession in 2020. However, it has faced a new round of headwinds, as economies face ongoing supply chain disruptions caused by both COVID-19 and spillover impacts of the war in Ukraine. Russia’s invasion of Ukraine and economic sanctions on Russia will raise global energy, commodity and food prices, pushing up inflation higher, while China’s zero-COVID-19 policy continues to affect global supply chains.

Asia century goes fast forward

The Asia Pacific economy led the COVID-19 recovery in 2021 and is expected to lead global economic growth in the coming years. By 2040, the region is forecast to account for 44% of global GDP, up from 34% in 2021. China alone will make up 22% of global GDP in the same year. Meeting demand from Asian consumers will thus be key to the growth of multinational companies in the years to come.

Inflation will be a key concern for businesses and consumers

In 2022, 116 out of 210 countries are forecast to see inflation rates higher than 5%. The rising cost of living will negatively impact the purchasing power of households in 2022 and 2023. Energy and food prices are likely to see the highest increases. On top of the rising cost of living, interest rates are likely to rise, making debt servicing costs higher for households and businesses.

Global supply chains are experiencing a major shift

COVID-19 pandemic showed the need for diversification of international business supply chains. In 2022, businesses experienced another source of risk for interlinked supply chains: geopolitics. With Russia’s invasion of Ukraine and the sanctions imposed on Russia, many international corporations exited Russia. These developments will cause businesses to take geopolitical risks even more into account in the future.

Introduction

Scope
Key findings
Global economy, finance and trade snapshots
Key trends in brief
Areas of opportunity

Economy, finance and trade today

Global economy, finance and trade in 2021 : Summary
War in Ukraine slows economic growth across regions
Inflation surges amid rising economic uncertainty
Rising inflation translates into higher interest rates
Rising economic risks start to affect business and consumer confidence

Global outlook

Global stagflation is the main downside risk for the global economy in 2022-2023
Asia Pacific will grow the fastest in 2022, boosting its share of the global economy
Six of the world’s ten largest economies will be emerging markets
Global GDP per capita will more than double by 2040

Top five economic trends

Top economic trends impacting economies, businesses and consumers
Inflation surge impacts both consumers and businesses
Geopolitical risks highlight the importance of diversification
Rising public debt: A growing risk for emerging and developing economies
Globalisation reset: Deglobalisation pressure accelerated by rising geopolitical risks
Shifting market frontiers: Opportunities in emerging Asia and Africa
Key trends in brief

Rankings of key indicators

GDP
Real GDP growth
Manufacturing as % of Gross Value Added (GVA)
Services as % of Gross Value Added (GVA)
Productivity
Foreign trade
Foreign direct investment (FDI)
Current account balance
External debt
Public debt
Interest rate
Inflation
Retail sales
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