Euromonitor has released its inflation and GDP growth forecast for the world, as at March 2022,
following the outbreak of the Ukraine – Russia conflict. It suggests the conflict will have the biggest
impact on “global energy and commodity prices”.
Euromonitor has raised its global annual inflation forecast by 2.6-2.7% compared to the forecasts pre the conflict breaking out, following “unprecedented economic sanctions on Russia” being announced by Western nations in support of Ukraine.
This is despite Russia being a leading oil, gas and commodities producer, with Russian exports of mineral fuels, oils and distillation products alone totalling US$199 billion in 2021 (40.5% of exports). The impact is as yet unknown, given that the conflict is not yet resolved, however Euromonitor says, “the global economy could suffer significant spill-overs from the conflict
throughout 2022-2023”.
GDP Growth
The report indicates:
Global real GDP will slow to 3.6% in 2022 and then to 2.8% in 2023. This after the big drop
into the negative in 2020, followed by the strong recovery to 6% in 2021.
The US will be impacted, with the 5.7% seen in 2021 reducing to 3.3% in 2022 and below 2%
in 2023.
The Eurozone will be hit harder, because of “its high dependence on Russian energy imports,
relatively high exposure to exports to Russia”. The forecast is a drop from 5.3% in 2021 to 3%
in 2022 and below 2% in 2023.
Developing economies may not be affected quite as much in this area. Real GDP growth was
just below 4% in 2019, but dropped to -2% in 2020. However, the drop was much less than
seen elsewhere, e.g. a drop of more than -6% in the Eurozone and more than -4% in the
advanced economies, while the worldwide average drop was about -3%. The developing
economies also showed a higher recovery rate in 2021 than all other economies (6.4%),
except China, which was much higher (8.1%). In 2021, the worldwide average was 6%, and
the advanced economies, the Eurozone and the US were all below 6%.
For developing economies, the GDP forecast for 2022 and 2023 is 3.9% and about 3.6%,
which is again above all other economies, except for China (4.2% and 4%). The forecasts for the advanced economies are below 3% and below 2%. For the US, it is 3.3% and below 2%.
For the Eurozone it is 3% and below 2%.
Inflation
According to Euromonitor, supply cuts from Russia and “precautionary hoarding by oil and gas
traders, is likely to lead to major energy price increases of 30-50% in 2022-2023”, with Europe
particularly vulnerable “due to its reliance on Russia for 40% of its gas”. In addition, “wheat prices
could double”.
All of this suggests global consumer price inflation (CPI) of 7.5% in 2022 and 6.4% in 2023. The
average annual global inflation rate for 2001-2019 was 3.8%, with a slight drop from 2019 to 2020,
followed by a climb to 4.3% in 2021. However, the forecast for 2022 is now 7.5%, followed by a drop to 6.4% in 2023. In terms of the various economies, the forecasts are as follows:
China’s CPI will increase from 0.9% in 2021 to 4.2% in 2022 and 4.1% in 2023.
Advanced economies will go from 3.1% in 2021 to 5.7% in 2022 and then just below 5% in
2023.
The Eurozone will go from 2.6% in 2021 to 5.8% in 2022 and just below 5% in 2023.
The US will go from 4.7% in 2021 to 7% in 2022 and 5% in 2023.
The developing economies had a slightly higher CPI, with 5% in 2019 and 2020, and 5.4% in
2021. This is forecast to reach 9.2% in 2022 before dropping slightly in 2023.
The forecasts will change as the situation changes and readers should keep a look out for revised
forecasts.
