The Covid-19 pandemic officially marks a grim second year this year. Nonetheless, there is some optimism among scientists that while the virus will become endemic, its threat to human life could reduce over time.
In the first of a three-part
Spirethoughts instalment examining analysts’ predictions for the new year
ahead, we look at 3 economic and social trends that are likely to affect the
global economy in 2022.
Debt and inflation to grow. Global debt accelerated during the pandemic as governments
continued to borrow. Twenty-five nations, including the US and China, now have
total debt amounting to more than 300% of GDP, as central banks contribute to
inflation by printing money, deepening the debt trap. Inflation, while on the
rise, seems unlikely to hit the historic double-digit levels of the 1970s, as
government spending should ease in 2022.
Industries overheat amid global
warming “greenflation”. The other continuing
story with global impact will be the ever-increasing impact of global warming.
Commodities needed for the generation of renewable energy - tin, aluminium,
copper, nickel cobalt, etc - look likely to become more expensive. This has the
short-term potential to derail or delay green energy projects, in a market
valued at over US$881 billion in 2020 and expected to be worth nearly $2
trillion by 2030.
Ageing population could drag
economies down, too. The world’s population
was projected to stand at 7.8 billion as of New Year’s Day. But for many
advanced economies, such as the US and China, population growth actually slowed
to grow by just 0.1%, and that number factors in net migration. The
implication for these economies could be staggering, as ageing populations draw
on national finances funded by dwindling pools of labour. This could trigger
declines of the sort seen in Japan since 2007 – unless countries can successfully raise
retirement ages and successfully integrate older workers into the job market,
which many countries struggle to do.
Will the expected global economic recovery be blunted by uncertainties amid the rise of new Covid-19 variants?
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