World to witness higher inflation, slower growth in 2022: IHS Markit

With shipping bottlenecks and some critical supply shortages persisting, global price inflation will remain high in 2022, Sara Johnson, executive director—global economics of IHS Markit, said in a note.

Worldwide inflation will likely remain near 5 per cent in early 2022 before gradually easing in response to declines in industrial and agricultural commodity prices. On an annual basis, global consumer price inflation picked up from 2.2 per cent in 2020 to 3.8 per cent in 2021 and will average 4.1 per cent in 2022 before subsiding to 2.8 per cent in 2023. Risks to the inflation outlook are concentrated on the upside.

Labor shortages are also contributing to the rise in inflation. In the United States, labour force participation remains below pre-pandemic levels and job vacancy rates have risen to record highs. Across Europe, COVID-19 has disrupted migrant labour flows.

Mainland China's zero-COVID policy and demographic shifts are restricting labour supply. Wage pressures are most acute in service sectors where workers are most exposed to the COVID-19 virus.

The US economic expansion will face headwinds from inflation and the withdrawal of fiscal and monetary policy stimulus, IHS Markit said.

After a mild 1 per cent decline in 2020 and 6 per cent growth in 2021, the Asia Pacific's real GDP is projected to expand by 4.8 per cent in 2022 and by 4.5 per cent in 2023, it added.

The global economic expansion will continue at a moderating pace in 2022 and 2023 alongside a transition from COVID-19 pandemic to endemic. With supply disruptions continuing, inflation will remain elevated in the months ahead, leading to monetary policy tightening. As demand growth cools and supply chain problems are gradually resolved, inflation will subside, it added.

ALCHEMPro News Desk (DS)