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Five threats to the world economy in 2022

Five threats to the world economy in 2022

Ground Report | New Delhi: Five threats to the world economy; The world economy returned strongly in 2021 after the situation derived from the pandemic. In the second half of the year, its pace slowed somewhat, due to new cases of the pandemic, supply chain disruptions, labor shortages, and a slow influx of COVID-19 vaccines, especially in low-income developing countries.

The slow recovery has forced economists at the International Monetary Fund and the 38-member Organization for Economic Cooperation and Development (OECD) to cut their forecasts for one-year global growth in October and December, respectively.

He kept his vision for 2022 but also warned that Covid variants could hamper growth. He stressed the need to quickly vaccinate a large part of the world’s population. The pandemic still poses a major threat to global growth, but it is not the only threat that will hold investors’ breath in 2022.

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Five threats to the world economy

Anti-vaccine covid variant

In November, there was panic in the financial market, of a new variant of the Omicron coronavirus, which was detected in South Africa. World commodity and financial markets were rocked by fear of this rapidly expanding variant.

Supply chain disruptions

Supply chain disruptions have played a major role in hampering global reforms this year. The strong return to demand following the shortage of shipping containers, as well as reduced shipping bottlenecks and restrictions related to the pandemic, triggered panic among component and raw material producers.

Rising inflation

Higher energy costs, coupled with lower inflows of raw materials and commodities, have pushed inflation in the eurozone and the US to many-year highs. Global investors are distraught, fearing that central banks will be forced to raise interest rates earlier than expected to control higher prices.

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In the US, inflation concerns are expected to be even greater, fueled by the rapid economic recovery, massive fiscal stimulus, and labor and supply shortages. The Federal Reserve has said it would cut its bond-buying stimulus plan more quickly and has signaled interest rate hikes in 2022. A Fed rate hike could spell trouble for some emerging economies, such as South Africa, Argentina, and Turkey, which could see a flight of capital.

China crackdown

The recession during 2022 in China, the world’s second-largest economy, will undoubtedly add to investor concerns. China, which calls itself the Asian economic powerhouse, helped the world recover from the recession caused by the epidemic during 2020, with the help of the huge demand for its electronic and medical products around the world. The Chinese economy is expected to grow at roughly eight percent this year. In this way, China will be the fastest-growing large economy after India.

Geopolitical tension

Even though temperatures are dropping in the Northern Hemisphere, they have been rising when it comes to relations between Russia and American and European allies. Washington warned Moscow against invading Ukraine amid a massive build-up of Russian troops on the border with Ukraine.

Allies of the US and Europe are weighing more economic sanctions against Russia, including halting the controversial Nord Stream 2 gas pipeline, should it invade its neighbor.

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