Despite the global slowdown, China and India will drive global economic growth in 2022
Omicron may discourage the economic recovery prospects in 2022. Source: pixabay.com
Despite the positive macroeconomic indicators in the first half, the new COVID-19 variant, Omicron, has contributed to the uneven economic recovery towards the end of 2021. The global economic forecast for 2022 is 4.6% in December. This is a drop from 4.5% in July 2021, according to GlobalData.
In Q1 2022, the real GDP growth in the US is forecasted to be 1.1%. This, again, is a drop from a GDP growth of 1.3% in Q4 2021. The GDP growth in the UK is also forecasted to slow down to 0.7%. This is a drop in comparison to the 0.9% growth observed during the same period.
This may be caused by the increase in infection rates and supply chain issues. Japan is forecasted to experience a rise in economic growth to 1.6% from 1.3%. This can be attributed to the additional support from the authorities.
The fast spread of the Omicron variant, the looming energy crisis due to coal shortages, increasing global inflation, chip shortage and the slowdowns due to political tensions are some of the factors negatively affecting the global growth in 2022.
The economic momentum picked in H1 2021 is also being lost by advanced economies including the UK, the US and European nations. This also comes as emerging markets significantly underperform due to the Chinese economic slowdown, lack of room for additional policies and uneven vaccination.
The surge in the Omicron resulted in the cancellation of over 12,000 flights in December 2021. And with the re-imposition of coronavirus restrictions, the tourism sector may face serious issues. However, global air passengers are expected to increase from 44% to 48% in 2022. Supply chain problems are also expected to ease in 2022 as production picks up.
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