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Following 5.6 Percent Rebound in 2021, Real GDP Growth Will Settle at 4.3 Percent in 2022; 3.4 Percent in 2023, IHS Markit Says

Supply chain challenges will continue to disrupt key industries; inflation to diminish starting in the second half of the year

Multiple transitions will impact the global economy next year: COVID-19 moving from pandemic to endemic, fiscal policy stimulus to restraint and an energy transition from hydrocarbons to renewables. Amid these transitions, global economic growth will slow in 2022, according to the annual Top-10 Economic Predictions released today by IHS Markit (NYSE: INFO), a world leader in information, analytics and solutions.

IHS Markit’s top prediction for 2022: new waves of COVID-19 will not derail the recovery. “The subsequent spread in new cases and the emergence of the Omicron variant signal a transition from pandemic to endemic. As COVID-19 continues to spread around the globe, government responses will again be primarily focused on avoiding stress in the health system and encouraging vaccination. While general lockdowns will be avoided, service activities will remain constrained until effective and affordable cures become available and make further restrictions unnecessary,” said Elisabeth Waelbroeck Rocha, chief international economist, IHS Markit.

Shipping disruptions, supply stickiness and energy price increases will continue to exert upward pressures on prices in the first half of 2022. Logistics bottlenecks will only be resolved later in the year, as demand for goods moderates and traffic normalizes, while increases in oil production and natural gas production alleviate pressures from energy prices. Wages will respond temporarily to labor market pressures in the U.S. and Europe with little-lasting effect on inflation. Year-on-year inflation rates will thus slow by the end of 2022.

High inflation, continued economic expansion and further progress in controlling COVID-19 impacts will encourage central banks to move toward tighter monetary policies in 2022. “With policy direction posted well in advance to help financial market participants discount policy adjustments over time, the risk of periods of sharp, severe generalized risk aversion and asset exposure reduction, triggering imbalanced markets and major “taper tantrums” will be reduced,” said Sara Johnson, executive director, global economics, IHS Markit. “We expect the U.S. Federal Reserve to raise interest rates in mid-2022, with the European Central Bank increasing rates in the first half of 2024.”

Other Top-10 predictions include:

  • The year ahead will bring a transition from active fiscal stimulus to a period of fiscal restraint aimed at stabilizing or reducing debt burdens: The global public-sector deficit is projected to shrink by about USD2 trillion to just under USD4 trillion in 2022, from about 6 percent in 2021 to 4 percent in 2022 as a share of GDP. The advanced economies account for the majority of the reduction, with the U.S. and Western Europe making the largest contributions. Progress on deficit reduction in emerging markets will be delayed by lagging economic expansions, high inflation, rising interest rates and social unrest.
  • The pace of the global expansion will slow, with regional divergence to continue: As supply-side disruptions ease, and barring negative surprises from new COVID-19 variants, growth will temporarily pick up, with the more industrial and trade-sensitive economies or regions to benefit most.
  • US growth will slow to 4.3 percent in 2022: Growth will slow from a significantly above-trend pace of 5.7 percent in 2021 to a modestly above-trend rate as a result of waning effects of the prior stimulus, withdrawal of monetary accommodation and satisfaction of pent-up demand. An initial upward realignment of wages in some areas will give way to a more fundamental and persistent pressure on wages and prices as labor markets broadly continue to tighten, limiting the decline in inflation. The Federal Reserve will complete its tapering of asset purchases in March.
  • Mainland China’s economy will grow below potential, expand at 5.5 percent in 2022: The government will be able to prevent a housing market crash by fine-tuning its real estate market policies to stabilize housing demand. Chinese property developers’ liquidity crunch is unlikely to trigger a financial crisis, due to mainland China’s domestically oriented financial intermediation, capital control and state command of the banking sector. However, the economy will grow below its pre-pandemic 6 percent potential growth rate, owing to the government’s firm stance on the zero-COVID policy and continuation of the property sector deleveraging drive.
  • A widespread emerging-market debt crisis remains a low probability: Emerging-market borrowing costs will rise, but from historically low levels. With few exceptions, this will not unsettle markets. Although some countries face ongoing elevated debt sustainability risks, others enjoy greater resilience, making a widespread global emerging-market crisis unlikely. For already stressed economies and those undertaking (or moving toward) unorthodox policies, individual risks will be greater.
  • Momentum behind ESG issuance will continue to grow, but policy support to accelerate the energy transition will be mixed: We expect more investment managers to develop ESG-focused investment funds and to increase their scrutiny of the environmental nature of their holdings. More emphasis on ESG disclosure, both by investing entities and issuers, will add to existing momentum at sovereign and supranational levels. Given the growing consensus in favor of actions to reduce the carbon footprint, we also expect ESG-related policy movement; however, given implementation hurdles, we don’t expect policy changes will have material effects on the economy in 2022.
  • Escalation of political tensions could create episodes of volatility: An increase in geopolitical tensions, especially those that would temporarily disrupt shipping and commercial aviation, would increase the risk of episodes of economic volatility in regional financial markets and currencies.

About IHS Markit (

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2021 IHS Markit Ltd. All rights reserved.


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