2022 Global Economic Outlook

2022 Global Economic Outlook: The Fast Lane

economies around the globe have been driving at full throttle. According to the International Monetary Fund, nominal world GDP grew by nearly 12% in US dollar terms last year, the fastest expansion in more than a decade. This rapid growth is particularly evident in manufacturing activity; the Global Manufacturing Purchasing Managers’ Index has been lower than its current level 83% of the time since 1998.38

Of course, operating at such speeds also increases the risk of overheating. Today’s combination of sharply rebounding economic activity and pandemic-related labor and supply shortages has already pushed inflation to multi-decade highs across the major economies of the world. Although some of these pricing pressures will fade with the pandemic, a persistent rise in wages and housing costs runs a greater risk of becoming entrenched in inflation expectations.