Crédito y Caución expects the world economy to grow by 4.2% in 2022

According to the analysis released in its latest Economic Outlook, Crédito y Caución expects the global GDP growth rate to reach 4.2% in 2022 and 3.6% in 2023, down from 5.8% in 2021. Although the global economy entered its recovery phase in 2021 thanks to the gradual reopening of economies and the progress of vaccination, the new, more transmissible Covid-19 variants are for the credit insurer the main downside risk facing growth prospects. "A more rapid spread of infections combined with new measures could push the global economy into a stagflation scenario," the report explains. If the pandemic intensifies, Crédito y Caución expects global GDP growth to be limited to 1.6 % in 2023. "The drag on GDP growth would be widespread across all major regions, driven by government constraints, worsening supply chain bottlenecks, faster inflation and weaker demand," it explains.

World trade levels have already recovered from their loss in 2020, although trade in goods recovered much faster than trade in services. Recently, the recovery in goods trade has been hampered by a number of shocks, including transport difficulties and factory closures in Asia. Global inflation has accelerated, driven by higher energy and commodity prices, rising transport costs and bottlenecks in the value chain. Crédito y Caución believes that this is a transitory process, although it will force central banks to reverse monetary stimulus more quickly than expected.

The economic recovery in advanced markets is losing steam. Supply chain disruptions and government restrictions are weighing on economic activity, which has deteriorated growth forecasts for advanced markets as a whole to 3.8% in 2022, followed by 2.3% in 2023. "Fiscal and monetary stimulus is being withdrawn, but advanced market economies have proven resilient and are expected to recover pre-pandemic output levels," the report explains.

Emerging economies as a whole are projected to grow by 4.6 % in 2022 and 4.8 % in 2023. Advancing vaccination could help output growth and improve consumer confidence. The credit insurer expects emerging Asia to remain the region with the highest growth rate among emerging markets.