Forecasts Quarter 1 2022

Chief Economist
Portfolio Manager

Global Economic Outlook

  • Having benefitted from enormous fiscal and monetary policy stimulus in 2020 and 2021, the world economy will have to adjust to a new policy reality going forward.
  • Engineering a smooth landing is never easy, and engineering a soft landing in the context of the current business cycle (extreme lows, followed by extreme highs) will be harder still.

Emerging Markets Outlook

  • Incoming macro data out of emerging markets (EM) remains mixed, mirroring Covid developments. However, we have kept our EM growth forecast unchanged and expect GDP to grow by 5.0% in 2022.
  • Driven by inflation and debt concerns, EM central banks are well ahead of developed market counterparts in terms of monetary policy normalization and many could be done tightening by mid-year.

Global Capital Markets

  • The Fed is being called upon to maneuver deftly using tools ranging from interest rate policy and forward guidance to lending operations and the unwinding of asset purchase programs.
  • It is unclear if an upcoming Fed rate-hiking cycle coupled with high inflation risks inevitably mean that bonds will fare poorly in 2022.

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