The global economy is set for another year of above-potential recovery growth in 2022, after expanding by a robust 5.1% in 2021. Global Economic Outlook 2022: From Pandemic Downturn to Growth Revival, our suite of forecasts for the decade ahead, tracks the future of this historically rapid resurgence with detailed analyses for the US, Europe, China, and the Gulf region.
“Despite the depth of the recession in the first half of 2020—and the unexpected setbacks of the Delta variant in 2021—the global economy has recovered rapidly from the pandemic shock compared to past recessions,” said Dana M Peterson, Chief Economist of The Conference Board. “Massive fiscal and monetary stimulus in major economies around the world—which built a bridge to economic reopening enabled by the rapid development of effective vaccines—likely prevented the recession from devolving into a long period of lackluster economic growth.”
Indeed, global GDP—which contracted by an unprecedented 3.3% in 2020—is calculated to have recovered all of its losses by Q1 2021. By the end of 2022, 66 out of 77 key economies, representing 96% of global GDP, should be at or above pre-pandemic output levels, though labor market and income recovery will lag somewhat.
“Now the hard work begins for businesses and policymakers,” added Peterson. “Lessons learned in resilience and surviving disruption during the pandemic will become increasingly relevant in the decade ahead, amid a new mix of challenges—including some trends catalyzed by the pandemic and others that predated it. Also, an evolution in the ways that we consume and work, including developments like telehealth and remote work, can potentially increase the productive capacity of the global economy and promote growth.”
Pent-up demand for consumer spending and business investment should help the global economy grow strongly in the year ahead—with The Conference Board currently projecting 3.9% global growth in 2022. Beyond this horizon, slower trend growth is expected as the era of rapid capital accumulation and working-age population growth comes to an end across mature economies and in China. Annual global growth is projected to average 2.5% in the years 2022-2026—down from 3.3% across the decade 2010–2019—before ticking down further to 2.4% in 2027–2031. Emerging and developing economies are expected to contribute to roughly 70% of the growth rate over the next decade and mature economies the other 30%—similar to their respective shares in 2010–2019.
“Challenges ahead include the potential of higher financing costs, heightened financial market volatility, inflation risks driven by rebounding growth and supply-chain bottlenecks, and ongoing labor shortages,” said Klaas de Vries, Economist at The Conference Board. “In this environment, harnessing the benefits from digital transformation strategies and upskilling workforces, should drive productivity growth through innovation and efficiency gains.”
Added Ataman Ozyildirim, Senior Director, Economics: “The challenge for most businesses in the decade ahead will be to implement growth strategies based on innovation and efficiency gains during a period of renewed labor shortages and tightening of monetary policy by major central banks in response to substantial inflation risks, which will impact costs of accessing capital. Business need to focus on both tangible and intangible investments to drive sustainable growth strategies.”
Among the critical long-term trends driving this forecast:
Global Economic Outlook 2022 includes detailed growth projections and scenarios through 2031 for 77 major world economies. Among the key projections of growth potential for mature economies:
Among the key projections of growth potential for emerging and developing economies:
About The Conference Board
The Conference Board is the member-driven think tank that delivers Trusted Insights for What’s Ahead®. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org.
For further information contact:
Joseph DiBlasi
781.308.7935
jdiBlasi@tcb.org
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Global growth is expected to slow over the next decade relative to the prior ten years.
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