Inflation will remain high this year as global growth slows: Reuters poll

By Shrutee Sarkar

BENGALURU (Reuters) – Sustainable high inflation will hit the world economy this year, according to a survey by economists, which has led to a slowdown in demand that slowed global growth forecasts and risk rates that would rise faster than previously thought.

This represents a change just three months ago, when most economists sided with central bankers that inflation would rise temporarily, driven in part by pandemic-related supply buttons.

In a recent Reuters quarterly survey of more than 500 economists in January, economists raised their inflation forecasts for 2022 for most of the 46 covered economies.

Although price pressures are still expected to ease in 2023, inflation forecasts are much more sticky than they were three months ago.

At the same time, economists lowered their forecasts for global growth. After expanding 5.8% last year, the world economy is expected to slow to 4.3% growth in 2022, below the 4.5% forecast for October, due in part to higher interest rates and higher living costs. Growth is expected to slow further in 2023 and 2024 in 2023 and 3.2%, respectively.

Nearly 40% of those who answered an additional question pointed out that inflation is the biggest risk to the world economy this year, almost 35% chose coronavirus variants, and 22% were concerned that central banks are moving too fast.

“The likelihood of an accident has increased and the likelihood of a smooth landing in 2022 requires some favorable assumptions and a bit of good luck.” Deutsche Bank (DE 🙂 David Folkerts-Landau, chief economist of the group, said that high inflation, the sustainability of supply chain tensions and the pandemic, as well as international political tensions.

GRAPH: Reuters Poll: Global inflation forecasts 2022, https://fingfx.thomsonreuters.com/gfx/polling/egpbklkmevq/Reuters%20Poll%20-%20Global%20inflation%20forecasts%202022.png Found this month’s Reuters2418 poll. major central banks would raise rates at least once this year compared to 11 in the October poll.

The US Federal Reserve https://www.reuters.com/business/finance/inflation-fighting-fed-likely-flag-march-interest-rate-hike-2022-01-26 stated on Wednesday that it would raise the federal benchmark. The fund rate was 0-0.25% lower in March after the close of the bond purchase program.

Bank of England https://www.reuters.com/markets/europe/inflation-risk-omicron-slowdown-boe-rate-move-balance-2021-12-16 was the first central bank to raise rates. The pandemic began and is expected to resume, Bank of Canada https://www.reuters.com/world/americas/timing-bank-canadas-rates-lift-off-knifes-edge-jan-26-hike-possible -2022 -01-21 also see mountaineering soon.

By contrast, most economists expect the European Central Bank to https://www.reuters.com/business/euro-zone-inflation-burn-hotter-ecb-rates-stay-ice-2022-01-19 and the Bank of Japan. https://www.reuters.com/markets/currencies/japan-pm-kishidas-wage-policies-unlikely-support-economy-this-year-most-2022-01-14 must be at least until the end of the year Next in.

Although the tension cycle is in its infancy in the early days, many emerging market central banks, with a few notable exceptions such as Brazil, https://www.reuters.com/article/latam-economy-poll-idUSL1N2U00P3 and China https: / / www.reuters.com/markets/asia/china-growth-seen-slowing-52-2022-modest-policy-easing-expected-2022-01-13, waiting for Fed information on pandemic and fighting on their own while economic challenges.

GRAPH: Reuters Poll: Global Growth Forecasts – January 2022, https://fingfx.thomsonreuters.com/gfx/polling/lgvdwxwlqpo/Reuters%20Poll%20-%20Global%20growth%20outlook.png “Fed has developed over the last three decades. The market-led central banks have sought to see growth as a drag on supply growth that is expected to slow inflation, “said JP Morgan’s global economist Joseph Lupton.

However, as major central banks show concern about bringing inflation expectations closer to their targets, emerging economies face a similar challenge.

“Central banks in emerging markets are likely to increase pressure to anchor inflation expectations,” Lupton said.

The growth forecasts for more than 60% of the 46 economies surveyed fell or remained unchanged by 2022, and about 90% of respondents, 163 out of 144, said their forecasts were in jeopardy.

Although most countries saw reductions in growth forecasts in the fourth quarter and this time, largely due to the spread of the Omicron coronavirus variant, it was expected to recover in the next quarter.

(Reuters for other stories in the global economic outlook survey package)