Global growth momentum weakens in 2022

Schroeder published a research report that the global growth momentum will weaken in 2022.

Schroeder pointed out that the economic cycle in 2021 is developing rapidly, much faster than the recovery after the financial crisis of the early 2010s, due to the combination of monetary and fiscal policy support, and the unique nature of this shock. The economic cycle is still likely to be much faster than it has become accustomed to in recent years. While Covid-19 has already had an impact on aggregate global supply, while the post-financial crisis recovery has been more marked by a lack of demand, leading to low inflation, the cycle has also had an impact on the supply side.

As a result, the trade-offs between growth and inflation have become more nuanced and complex, but also more important for economists, investors and central banks to understand.

Whatever the cause, there is a limit to the central bank's tolerance for inflation, Schroeder said. Even after strategic assessments designed to help lead to exaggeration. Taken together, one has moved from a world where central banks place high priority on “forward guidance” to a world where “selectivity” has become critical. This is expected to continue into 2022, and possibly even beyond 2022.

Schroeder's 2022 investment outlook, citing weakening global growth momentum (though still strong in absolute terms), coupled with a more hawkish Fed should see the curve continue to flatten, supporting the dollar's strength against a basket of currencies. Exchange rates; in the first quarter of 2022, the opportunity to favor local currency bonds in some of these emerging markets is likely to become very attractive; the outlook for riskier assets such as credit is less attractive than in 2021.