Ping An View:
In 2021, with the sharp rise of price levels in major developed economies such as the United States and Europe and the sharp rise of global commodity prices, inflation has become one of the most distinctive features of the global economy in the post epidemic era. This paper combs the main factors affecting global inflation since 2021, looks forward to the development direction of multiple factors in 2022, and finally briefly discusses the inflation in the post epidemic era.
1、 Review of global inflation in 2021
Influencing factors of global inflation in 2021: 1) economic recovery, “inflation re inflation” is a normal phenomenon of economic recovery. However, the inflation trend in the United States and Europe in 2021 is obviously higher than the base effect, and the demand recovery is faster and the supply repair is slower than expected. 2) Monetary stimulus, fiscal stimulus, vaccination, etc. to accelerate the recovery of demand. 3) Repeated epidemics, energy transformation, supply chain bottlenecks and trade protection have formed supply constraints.
2、 Global inflation outlook in 2022
Changes in the main factors affecting global inflation in 2022: 1) economic recovery: the slope of global economic recovery slows down and global commodity supply and demand become more balanced. 2) Policy stimulus: the global monetary and fiscal stimulus has declined, and the policy margin is limited. 3) Covid-19 epidemic: there are still variables in the development of covid-19 epidemic in the world, but the suppression on the supply side is expected to weaken. 4) Employment: the global job market continues to repair. While increasing supply, it also makes the monetary policy more resolute. 5) Medium and long term problems: energy transformation, some supply chain bottlenecks and trade protection will continue to heat up inflation. In conclusion, it is expected that the global inflation rate in 2022 will probably fall down under the base effect, but it may still be higher than the level before the covid-19 epidemic.
3、 Thoughts on inflation in the post epidemic Era
1) Inflation and economic growth. Moderate inflation is beneficial to economic growth, but too high inflation will inhibit economic growth. In 2021, the “inflation” of the United States became the catalyst for “stagnation”. 2) Inflation and monetary policy. Inflationary pressure determines the space for monetary policy. Inflation in the United States, Europe and other countries affects the acceleration of monetary policy tightening, while emerging markets tend to raise interest rates defensively. Inflation may be a persistent challenge to global monetary policy. 3) The global inflation pattern may face a reset. Since the global financial crisis, insufficient effective demand, scientific and technological progress, international trade and other factors have created a global pattern of low inflation. After the covid-19 epidemic, some long-term factors that inhibit inflation may change, such as green economy stimulating investment and growth, energy transformation or inhibiting productivity in the short term, and trade protection continuing to upgrade.
Risk tip: the impact of mutated virus exceeded expectations, global inflation exceeded expectations, and the policy strength of central banks such as the Federal Reserve exceeded expectations.
