Global economic growth uncertain – analysts

Global economic growth is set to remain strong, albeit uneven, pointing towards a rising divergence between advanced and emerging economies.

The growth will be fuelled mainly by consumption, rising investments and rebounding global trade.

This was according to insurer and asset manager Allianz Group’s recently published ‘Economic Outlook 2022’ report.

The organisation noted that global output was expected to increase 4,1% this year, with the EU and US economies growing in line with the global economy at 4,1% and 3,9%, respectively.

China’s growth of 5,2% in 2022 would constitute the lowest contribution to global GDP growth since 2015, and would most likely cause negative spillover effects on emerging markets.

COVID-19 vaccination rates, supply bottlenecks and policy choices would be the factors potentially impeding growth, the report said.

Wandile Sihlobo, chief economist at Agbiz, noted, however, that the escalating Russia-Ukraine conflict could upset any hope of economic recovery. “There’s great uncertainty at the moment, and any recovery that we were beginning to see this year, as economies rebounded after the COVID-19 pandemic, hangs in the balance. The effect of the conflict on global trade is still unfolding and could be far-reaching.”

He noted that trade constraints as a result of the conflict could raise the prices of some commodities, and lower others. “We can’t say yet who will be affected and in what way. We need to get used to heightened uncertainty.”

However, supply chain disruptions continued as a result of the pandemic, with higher energy prices and a tighter labour market. This meant inflation would most likely remain high until mid2022, the report predicted.

It noted that potential complications related to the Omicron variant and any possible new variants of the coronavirus could further impede any recovery and create additional global imbalances.

“As long as the vaccination rates remain below the threshold required to secure herd immunity, potential new lockdowns could keep recovery uneven and incomplete,” the report stated.

These concerns were now being added to those about the Russia-Ukraine conflict and its effect on global trade. This could derail the expected growth of 5,4% in 2022 and 4% in 2023. – Lindi Botha