The global epidemic may last for a long time, and the probability of ending in 2022 is low: the experience of South Africa shows that the wave of infection caused by Omicron may not last long. It is believed that with the variation of the virus, the toxicity and infectivity of the virus will tend to decrease, and covid-19 virus will eventually evolve into a virus similar to seasonal influenza, while the characteristics of Omicron virus with stronger infectivity but lower severity make it expected to be the beginning of the end of covid-19 epidemic. However, this process may take a long time, and the virus still needs to mutate to gradually reduce its transmission capacity. At the same time, there are large country differences in the global popularization of vaccine, which also adds uncertainty to the end of the epidemic. We expect that the epidemic may last for a long time and the probability of ending in 2022 is low, but the impact of the epidemic on the economy is expected to continue to weaken.
Global inflationary pressure is expected to ease in 2022: since 2021, consumers around the world are experiencing rising prices of goods and services driven by strong demand, shortage of inputs, soaring commodity prices and the government's expansionary fiscal and monetary policies. By 2022, with the continuous improvement of the global supply chain, the continuous decline of energy prices and the tightening monetary policy of most central banks, inflation is expected to ease gradually. However, considering the impact of non temporary factors such as wages and rents, even if the global supply chain continues to recover and oil prices drop, the inflation rate of the United States will still be higher than the annual target of 2% of the Federal Reserve in 2022. At the same time, the gradual cancellation of national stimulus programs and the gradual tightening of financial and monetary environment mean that the pace of economic growth may slow down in 2022.
In 2022, the Fed's interest rate increase and contraction will lead to global liquidity tightening: high inflation has triggered the fed to enter the anti inflation mode, and taper, interest rate increase and contraction will follow. Although the pace of the Fed's subsequent actual policy tightening remains uncertain, global liquidity tightening has become inevitable. It is expected that the tightening of the global financial environment, the rise of US interest rates and the strengthening of the US dollar will once again trigger fluctuations in the capital market and have a negative impact on currencies, asset prices and economic growth in emerging markets. Some emerging countries with weak economic foundation and unbalanced balance of payments need to be vigilant against exchange rate crisis.
China's monetary policy is loose before and stable after, and the fiscal policy is more active. In the first half of 2022, the economy is expected to stabilize, and the annual GDP growth rate returns to the potential growth rate, with the annual growth rate slightly higher than 5%. In 2021h2, China's economic kinetic energy is gradually weakened, and 2021q3gdp is only 0.2% month on month, which will lower the GDP growth rate in 2022h1 and increase the pressure on steady growth. The central economic work conference summarized China's current economic situation as facing the triple pressure of demand contraction, supply shock and weakening expectation, and released a clear counter cyclical regulation overweight signal. Looking forward to 2022, with the increase of counter cyclical policy, the growth rate of social finance stock is expected to rebound to about 11% in the first half of the year, and the quarter on quarter level of GDP is expected to return to the normal fluctuation range in the same period in history. In the second half of the year, as the pressure on steady growth becomes relatively small and the Federal Reserve may start to raise interest rates, there may be marginal adjustments in monetary and fiscal policies, the strength of countercyclical policies may weaken, and the support for economic momentum may decline. On the other hand, the year-on-year growth rate of GDP in the second half of 2022 will no longer be affected by the historical low value of GDP in the third quarter of 2021. Therefore, it is expected that the year-on-year growth rate of GDP in the second half of 2022 will rise compared with the first half of the year and is expected to recover to about 6%. Overall, with the positive help of policies, we expect the economy to stabilize in 2022, the growth rate is likely to be low before and high after, and the annual growth rate is expected to be slightly higher than 5%.
