Reading guide
In 2021, the global economy benefited from the fiscal and monetary stimulus of Europe and the United States, and the developed markets experienced rare high growth and high inflation. The repeated epidemics and supply shocks make the global economic recovery stop and go, and the mismatch between supply and demand directly leads to the concern of stagflation. Will the global economy be fully open in 2022? Is the overall recovery kinetic energy weak or strong? Is the macro policy tight or loose? Do different global economies continue to show an unbalanced recovery and a pattern of two worlds?
This paper focuses on the epidemic situation and supply chain, and looks forward to the global economic situation in 2022. In 2022, the recovery of labor market and supply chain will become the key to maintaining the resilience of global economic growth, and the change in the rhythm of policy shift will be the main source of capital market fluctuations.
abstract
1、 The dawn of getting out of the epidemic is now? The possibility of full opening of developed markets has increased, the asymmetric impact of the epidemic and the differentiation of recovery will continue, and the global economies will relay the opening of their doors
The epidemic in 2021 had an asymmetric impact on the global economy, changing the pattern of the global economy from three aspects: supply, demand and trade circulation. First, the epidemic has led to increased friction in the job market and frequent structural shortage of workers, which has a great impact on the middle-aged and elderly labor force and low-income people; Second, the impact of the epidemic on commodity consumption has gradually subsided, but it still inhibits the demand for services; Third, the gap between global vaccine production and vaccination and the gap between opening up lead to a gap between supply and demand, which promotes the demand for international trade. The increase of China’s international export share stems from the decline of the share of developed economies and the stagnation of the share of emerging economies.
The marginal impact of the new epidemic on the economy has decreased. With the improvement of the overall vaccination level, the severe disease rate and mortality caused by the mutant virus did not increase significantly.
In the future, the global economy will continue to walk out of the impact of the epidemic along the path of differentiation. In 2022, developed economies will take the lead in fully opening up their markets by taking advantage of the epidemic risk of specific drugs and “coexisting with the virus” in combination with vaccination. The overall distribution of vaccine resources is still uneven. Although the vaccination gap has narrowed, developing economies will still lag behind developed economies. The recovery cycle of emerging economies will still face the impact of epidemic. In the future, it will be gradually opened up with the establishment of immune barriers.
2、 How to deduce the supply chain bottleneck? Energy, chips and other bottlenecks in the middle and upper reaches will be alleviated in 2022, but the transportation problems in the downstream ports will continue or exceed expectations
In 2021, the upper, middle and lower reaches of the global supply chain will be vulnerable, and the global economic cycle will be blocked. Behind the appearance of labor shortage in the United States, cabinet shortage in China, power shortage in Europe and core shortage in Japan, the crux of the supply chain lies in the pressure of energy transformation, complex industrial chain and low port efficiency. The recovery of energy supply and chip capacity in 2022 is uncertain, while the recovery of port transportation channels is difficult. The upstream, middle and downstream of the supply chain are closely related. Once the port transportation supply chain continues to deteriorate, it may drag down the supply recovery of key raw materials such as chips.
Global carbon reduction in 2021 has led to increased inflationary pressure and shortage of energy supply. In 2022, the “Impossible Triangle” of energy will be rebalanced, the importance of energy supply security objectives will increase, energy prices will return to stability and central decline, which will reduce inflationary pressure.
The shortage of key raw materials of chips in 2021 restricts the production of manufacturing industry. After the epidemic, the global semiconductor cycle went up more than expected, while chip manufacturers did not expect enough. The global semiconductor industry chain is complex, and under the impact of the epidemic, the distribution of semiconductor manufacturers’ production capacity between electronic chips and automobile chips is also disordered, resulting in restrictions on automobile production. The chip is related to the future status of scientific and technological innovation and the realization of carbon neutralization strategy. Since the second half of 2021, major semiconductor manufacturers have actively expanded their production plans. With the implementation of automobile chip production capacity and supply and repair, the lack of core is expected to be alleviated. In 2022, global automobile manufacturing is expected to usher in prosperity repair, and the inflation caused by second-hand cars is also expected to ease.
The dislocation of recovery in 2021 led to port congestion in the United States, Europe and Southeast Asia. The economic dislocation recovery and the one-way path dependence of European and American demand on Chinese exports are the cyclical factors of this round of port congestion. However, the deeper reasons for port congestion in the United States lie in the backward port infrastructure, inefficient management system, insufficient truck capacity and persistent labor and capital contradictions. Cyclical factors will be alleviated in 2022, but the institutional problems of port logistics in the United States are difficult to solve, which may lead to the lengthening of the rhythm of replenishment.
3、 Judgment on the general trend of global economy and financial market in 2022
In terms of economic growth, the risk of global economic stagflation in 2022 is small, and the growth rhythm is high before and low after. The global economy has been in the pattern of “three low and one high” for a long time, and high inflation is rare. Considering the improvement of supply chain efficiency in the future, the inflation rate will probably fall. In terms of regional structure, China and the United States have successively completed the recovery cycle, and the subsequent resilience may also lead global growth. In terms of demand structure, the driving force of growth will switch from consumption to investment. The output and inventory investment of mechanical equipment industry in the United States have great room for improvement, and the acceleration of capital expenditure may become the biggest bright spot in 2022.
In terms of macro policy, in 2022, the Federal Reserve turned to increase interest rates and the expectation of fiscal expenditure weakened. The Federal Reserve may raise interest rates in 2022 in advance. Due to short-term economic growth and high inflation expectations, monetary normalization may accelerate. The European Central Bank also faces inflationary pressure, but the lagging economic recovery in the eurozone is the reason why monetary policy is not in a hurry to tighten. In 2022, major overseas economies will face political cycle changes, and the possibility of continued fiscal force will be reduced. Subject to the risk of high inflation and political contradictions in the mid-term elections, the US fiscal overweight is expected to weaken in 2022, and the fiscal support for economic growth is weakened.
In terms of financial market trends, the world will face a cycle of US dollar interest rate hikes in 2022, and be vigilant against dual risks. First, after the tightening of liquidity, the risk appetite decreased, resulting in the rebalancing of stocks and bonds. The flattening of the bond yield curve and the narrowing of the term premium lead to the rise of the short-end interest rate higher than the long-end interest rate: the overall pressure on the stock market valuation, and the plates with high deviation from the profit growth rate face greater pressure. Second, be alert to the risk of rising real interest rates. The stronger than expected US dollar will bring pressure on capital to return to the United States. In 2022, the slowdown to tightening of liquidity investment may lead to the central rise of real interest rate. The continued strength of the US dollar will make the market with backward economic growth fundamentals face greater capital outflow pressure.
Risk tip: the tail risks that may be caused by the deterioration of the epidemic include that the supply bottleneck cannot be alleviated, which will drag down the economic momentum; Inflation continued to exceed expectations, the central bank accelerated the pace of raising interest rates, and global liquidity tightened beyond expectations. Changes in the US political cycle may lead to the escalation of Sino US frictions and lead to market hedging.
