After the euphoria of the recovery, the world economy fears a new slowdown

After the economic cataclysm of 2020, the recovery of the world economy has been vigorous, but the shortage of essential products, inflation and the health situation caused by COVID-19 raise fears of a slowdown in 2022.

A recovery at various speeds

From China to the United States, from Europe to Africa, the pandemic paralyzed the world’s economies almost simultaneously in the spring of 2020.

Two years and five million deaths later, the recovery is more scattered.

Rich countries have benefited from privileged access to vaccines: the United States has already left behind the traces of its worst recession since the Great Depression of the 1930s and the euro zone could have done the same by the end of the year, although the rapid rise of a fifth wave epidemic and the detection of a new variant are worrisome.

“COVID-19 will continue to be a threat”Moody’s warns in a note.

And this threat has already materialized in regions with low vaccination rates, such as sub-Saharan Africa, where only 2.5% of the population was vaccinated in October and which, according to the IMF, is doomed to a slower economic recovery.

Until 2024, most emerging and developing countries are likely to fall short of their pre-pandemic growth forecasts, predicts the International Monetary Fund (IMF).

Many central banks (in Brazil, Russia or South Korea) have raised interest rates to avoid runaway inflation, which could hamper their recovery.

Even in China, the locomotive of global growth, the recovery is slowing as risks mount, the IMF recently warned.

In China, consumption is struggling to return to pre-pandemic levels, there are fears about the difficulties of real estate giant Evergrande and power cuts penalize business activity.

Inflation and shortages

“The biggest surprise of 2021 was the increase in inflation”Goldman Sachs analysts write in their forecast for 2022.

It was driven by the disorganization of supply chains and the shortage of essential products for international trade, such as semiconductors, a consequence of the explosion in demand during and after the crisis.

But also due to the discouragement of many actors in world trade, such as port unloaders, truck drivers or supermarket cashiers who did not return to work after the lockdowns and caused a labor shortage.

Inflation is also explained by the increase in the price of raw materials (wood, copper, steel) and energy (gasoline, gas, electricity).

The rise in prices, considered “temporal“For central banks, it worries the leaders and even the president of the United States, Joe Biden, pointed out in November that reversing the trend is”an absolute priority”.

“The question is whether we have really come out of the crisis”Said Roel Beetsma, professor of economics at the University of Amsterdam.

At the moment, the IMF continues to expect world growth of 4.9% for next year.

The climate issue

The balance between economic growth and the climate issue is increasingly difficult to achieve, as the conclusions of COP26 showed.

The agreement reached at the conference calls on states to increase their commitments to reduce greenhouse gas emissions from 2022, but does not set the world on track to limit warming to “far below”Of 2 ° Celsius, as established in the 2015 Paris agreement.

“Thinking in the short term is a common phenomenon, especially among politicians”Laments Roel Beetsma, who advocates a carbon tax that is uniform across industries and sufficiently dissuasive, which is far from the case today.

Climate change and related natural disasters could also affect food prices.

World prices are already close to their 2011 records, according to the Food and Agriculture Organization of the United Nations (FAO).

Wheat is up almost 40% in one year, dairy products 15% and vegetable oils are breaking records.