Climate Action

These 5 charts reveal the global economic outlook for 2022

Chinese Lunar New Year festivity in Shanghai.

The global economy has changed due to the pandemic and supply bottlenecks. Image: REUTERS/Aly Song

Lucia Quaglietti
Senior Economist, World Bank Prospects Group
Collette Wheeler
Économiste, Banque Mondiale
Share:
Our Impact
What's the World Economic Forum doing to accelerate action on Climate Action?
The Big Picture
Explore and monitor how Pandemic Preparedness and Response is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Pandemic Preparedness and Response

  • Global growth is expected to decelerate markedly in 2022, from 5.5% to 4.1%, according to the World Bank.
  • This reflects the continued disruption caused by COVID-19, as well as supply bottlenecks.
  • The rebound in global activity, together with supply disruptions and higher food and energy prices, have pushed up headline inflation across many countries.

After rebounding to an estimated 5.5% in 2021, global growth is expected to decelerate markedly in 2022 - to 4.1 %, reflecting continued COVID-19 flare-ups, diminished fiscal support and lingering supply bottlenecks.

Although output and investment in advanced economies are projected to return to pre-pandemic trends next year, they will remain below in emerging market and developing economies (EMDEs), owing to lower vaccination rates, tighter fiscal and monetary policies and more persistent scarring from the pandemic.

Various downside risks cloud the outlook, including simultaneous Omicron-driven economic disruptions, further supply bottlenecks, a de-anchoring of inflation expectations, financial stress, climate-related disasters and a weakening of long-term growth drivers. Because EMDEs have limited policy space to provide additional support if needed, these downside risks heighten the possibility of a hard landing.

This underscores the importance of strengthening global cooperation to foster rapid and equitable vaccine distribution, calibrate health and economic policies, enhance debt sustainability in the poorest countries and tackle the mounting costs of climate change.

1. Global growth is projected to decelerate in 2022 and 2023

Contributions of major economies to global growth.
Comparing growth contributions of major economies. Image: World Bank

Global growth is set to slow sharply, as the initial rebound in consumption and investment fades and macroeconomic support is withdrawn. Much of the global slowdown over the forecast horizon is accounted for by major economies, which will also weigh on demand in emerging market and developing economies (EMDEs).

2. EMDEs are projected to experience a weaker recovery than advanced economies

Deviation of output from pre-pandemic trends.
Deviation between the latest projections and pre-pandemic trends. Image: World Bank

In contrast to advanced economies, most EMDEs are expected to suffer substantial scarring to output from the pandemic, with growth trajectories not strong enough to return investment or output to pre-pandemic trends over the forecast horizon of 2022-23.

3. After surprising to the upside in 2021, global inflation is expected to remain elevated this year

Consensus median inflation forecasts.
Median global inflation is forecast to remain elevated in 2022. Image: Consensus Economics; World Bank
Discover

Who are the collaborating partners in this SGB Financing Initiative?

The rebound in global activity, together with supply disruptions and higher food and energy prices, have pushed up headline inflation across many countries. More than half of inflation-targeting EMDEs experienced above-target inflation in 2021, prompting central banks to increase policy rates. Consensus forecasts anticipate median global inflation to remain elevated in 2022.

4. Severe economic disruptions driven by the rapid and simultaneous spreading of the Omicron variant are a key downside risk to near-term growth

Possible Omicron-driven growth outcomes for 2022.
Possible Omicron-driven growth outcomes for 2022. Image: Oxford Economics; World Bank

The slowdown in global growth from 2021 to 2022 could be sharper if the fast spread of Omicron overwhelms health systems and prompts a re-imposition of strict pandemic control measures in major economies. Omicron-driven economic disruptions could reduce global growth further this year - anywhere from 0.2 to 0.7 percentage point, depending on underlying assumptions. The associated dislocations could also aggravate supply bottlenecks and exacerbate inflationary pressures.

5. Global cooperation and effective national policies will be needed to address the severe costs associated with weather and climate disasters

Economic losses from weather and climate disasters.
Economic losses from weather and climate disasters. Image: EM-DAT, CRED/UCLouvain, World Bank
Have you read?

Severe natural disasters and climate-related events could also derail the recovery in EMDEs. Global cooperation is needed to accelerate progress toward meeting the goals of the Paris Agreement on Climate Change, and to reduce the economic, health and social costs of climate change, many of which are born disproportionately by vulnerable populations.

The international community can also help by scaling up climate change adaptation, increasing green investments and facilitating a green energy transition in many EMDEs. National policy actions can also be tailored to promote investments in renewable energy and infrastructure and to foster technological development. In addition, policy makers can prioritize growth-enhancing reforms that increase preparedness for future climate-related crises.

Loading...
Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Climate ActionHealth and Healthcare SystemsEquity, Diversity and InclusionEconomic Growth
Share:
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Translating Critical Raw Material Trade into Development Benefits

Jack Hurd

May 23, 2024

About Us

Events

Media

Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum