Six unfolding stories of 2022
Our investment team looks at six key themes that we believe will drive economies and markets in the year ahead - and beyond.
The global economy rebounded strongly in 2021 from the shock of the pandemic. However, the unusual circumstances of the past two years mean that this recovery has looked very different.
Inflation is one distinctive feature. The combination of strong consumer demand and impaired supply chains has resulted in prices rising at the fastest rate since the early 1980s. While some inflation is welcome as economies grapple with huge debt burdens, too much can be harmful and central banks are now starting to respond to the threat.
Inflation — and what it means for monetary policy — are two of the key themes that we explore in-depth in our Wealth Management 2022 Outlook. We also consider prospects for corporate earnings and rising geopolitical risks.
Meanwhile, longer-term trends will continue to shape the investment outlook, in 2022 and beyond. Climate change and the growth of private asset markets are two which we explore in this year's outlook.
While Omicron is an unwelcome reminder that the pandemic is still a significant threat, we expect to see continued growth in both the global economy and corporate earnings in 2022. However, returns could be lower, and more volatile, than in 2021.
2022 Summary Views
- Global economy: another year of above average growth
- Inflation: to peak in the first quarter of 2022 and settle at a higher level than we saw before the pandemic
- Corporate earnings: set to increase modestly. But pricing power will be crucial and some companies may struggle to protect margins from higher costs
- Monetary policy: Central bank stimulus measures in developed markets will come to an end
- Interest rates: to move modestly higher in the UK and US but unlikely to return to long-term average levels
- Climate change: to remain a key focus for consumers, governments, companies and investors
- Covid-19: Omicron and other variants could pose a threat to our outlook for continued economic recovery and / or inflation
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.
Topics