Economic Trends That Investors Should Consider
Growth is expected to remain strong and propel markets through that growing wall of worry.
Although 2021 ends with interesting economic data, such as GDP growth and the reactivation of some sectors to pre-pandemic levels, there is still some caution in other aspects, such as inflation and the dollar.
Next, Jack Janasiewicz and Garret Melson, strategists at the asset management company, explain the economic trends investors should be watching in 2022.
WORLD GROWTH
According to experts, “Every quarter, some of the largest and most followed companies have shattered expectations as economic growth surprised to the upside. With those benefits came strong guidance and a greater sense of supply chain disruption. “
For Janasiewicz and Melson, similar behaviors are expected in 2022, as ” investors underestimate the gains in operating leverage achieved through the pandemic through cost management and optimization .”
They also forecast that supply chain bottlenecks and labor shortages that affected 2021 may be reduced next year and lead to more economic growth.
DOLLAR AND EMERGING MARKETS
For experts, ” the dollar seems willing to remain stubbornly strong “, which could limit the attractiveness of developed and emerging international markets during 2022.
” Oil prices, likely to remain in 2022, pose another medium-term threat to the recovery of demand in Europe. That said, 2022 is likely to be a year of two halves, in which the leadership of the US. The US gives way to a recovery international trade thanks to a true resynchronization of world growth in the second half of the year, “they added.
They also said that continuing to strengthen the countries’ response against covid-19 would make world economies adapt to a coexistence strategy: “ That resynchronization and acceleration of global growth are the keys to unlocking a weaker dollar and making way for outperformed international developed and emerging markets equities ”.
INFLATION
Finally, on inflation, they commented that it is likely that, during 2022, it will reach higher levels before covid-19, ” but we disagree with any expectation of a significant increase .”
Inflation could end up being a one-time price move rather than a persistent and steady upward march. ” The problems related to the supply chain and bottlenecks will be transitory, not permanent. If COVID-19 is controlled, people will end up returning to the labor markets and the pressures will diminish, ” they added.
