Two years of uncertainty and lockdown that resulted in the largest drop in Global GDP History, the 2022 is forecasted to look better and brighter. As pandemic volatility continues to fade, economic growth is expected to rise with an increase in the equity market.

The world economy dwindled when the pandemic hit in 2020 due to mass travel restrictions and high rate of infections. According to reports, the world economy declined 4.3 percent in 2020, over two and half times more than the global financial crisis of 2009. The effect of the pandemic pushed 131 million more people into poverty and many of them consist of women, children and people from marginalized communities, according to the UN Department of Economic and Social Affairs.

Global trade in 2020 fell by 8 percent as a result of massive disruptions in global supply chains and tourism flows, a figure which is far lesser than the aftermath of 2008 global financial crisis where global trade experienced a 22 percent slump. At the start of the outbreak, worldwide lockdown implemented as a measure to contain the spread of the virus took a heavy toll on global trade, which contracted by around 4 percent in the first quarter of 2020 and then fell a further 15 percent in the second quarter. However, global trade quickly bounced back in the third quarter of 2020, recording an almost 20 percent growth compared to the previous quarter, with recovery continuing in the fourth quarter, seeing an increase of 7 percent.

GDP In The World’s Largest Economies

Compared to the economic growth in 2020, the economy in 2021 fare better. Gross Domestic Product (GDP) in 2021 showed slight growth compared to the previous year as vaccinations rolled out are sped up in many countries. For advanced economies, it is easier for them to recover as the vaccinations roll out is centered in these countries.

The United States is the world’s largest economy by nominal GDP and net wealth, and it is the second-largest by purchasing power parity (PPP) behind China. It has the most technologically powerful and innovative economy in the world. The country recorded a -3.5 percent in 2020, down from 2.3 percent in 2019. However, in 2021, the country is estimated to record 7.39 percent in their real GDP. The total household net worth stood at $141.7 trillion dollar through the second quarter of 2021, thanks to the surge in stock market earnings. It was a $5.85 trillion increase, or 4.3 percent from the first quarter, according to the central bank’s Financial Accounts of the United States report.

China’s economy is expected to slow after a strong rebound in the first half of 2021, while the economic activity in China slowed rapidly in the second half of 2021. According to Word Bank, China is projected to reach 8 percent in its real GDP for 2021, before reducing to 5.1 percent in 2022. Its GDP in 2021 is a far cry from what the country achieved in 2020, when the pandemic badly dampened China’s economy. In 2020, it recorded 2.3 percent GDP growth. In November 2021, China surpassed the United States to become the richest nation in the world, according to a report by the research arm of consultants McKinsey & Co. The country’s wealth jumped to $120 trillion in 2020 from just $7 trillion in 2000, a whopping $113 trillion dollar increase in 20 years.

The economy of Japan is a highly developed free-market economy. It is also the world’s second largest developed economy. According to official data from the World Bank, the GDP in Japan was worth 4975.42 billion US dollars in 2020. Its GDP fell to -4.8 percent in 2020 from 0.7 percent in 2019. The service sector contributes largely to the GDP of the country, at about 68 percent. The size of GDP in real terms in fiscal 2022 is expected to reach a record ¥556.8 trillion, topping the previous high of ¥554.3 trillion logged in fiscal 2018. The Japanese government had previously estimated a 2.2 percent growth in GDP in 2022, but has recently upgraded it to a real 3.2 percent.

Germany is one of the largest exporters globally with $1810.93 billion worth of goods and services exported in 2019. The service sector contributes around 70% of the total GDP, industry 29.1%, and agriculture 0.9%. Exports accounted for 41% of national output. In 2016, Germany recorded the highest trade surplus in the world, worth $310 billion, which made the country the biggest capital exporter globally. The GDP growth in Germany declined to -4.90 percent in 2020 due to the Covid-19 pandemic, but it bounced back stronger at the start of 2021 and it is expected to reach 4.2 percent. Germany is expected to real a real GDP of 5.2 percent in 2022,

The United Kingdom is the fifth largest national economy in the world, and it is a highly developed social, market-oriented economy. The service sector contributes 81 percent of the GDP, whereby the financial service industry plays an important role. London is the second-largest financial service center in the world. In 2021, the country’s economy is expected to grow 5.5 percent, from -9.9 percent in 2020. GDP in 2022 is projected to decline to 5.1 percent.

For the first-time next year, the world’s economic output will exceed $100 trillion. The Economic superpower is expected to shift from the United States to China who’s thought to overtake as the number one economy in the near future. British consultancy Cebr predicted, come 2030, China will become the world’s top economy in dollar terms as Russia is forecasted as one of top 10 economies by 2036. India looks set to overtake France next year. It’s also reported that Britain will regain its place as the world’s sixth biggest economy in 2023 and Germany is on track to overtake Japan in terms of economic output in 2033. A surprise contender in the economic race is Indonesia, predicted to rise to ninth place in 2034.

“Next year, we expect S&P 500 to reach 5050 on continued robust earnings growth as labor market recovery continues, consumers remain flush with cash, supply chain issues ease, and inventory cycle accelerates off historic lows.” Dubravko Lakos-Bujas, Chief U.S. Equity Strategist
“When the smoke created by pandemic volatility clears, forces promoting a global reflationary tilt will come into focus as healthy private sector fundamentals and growth-oriented policy stances interact with a global economy operating with limited slack.” Bruce Kasman, Head of Economic Research
“With the economy expected to grow firmly above trend in 2022, inflation expectations are expected to remain well anchored and as the Fed is being patient in raising rates, compared to prior tightening cycles, Treasuries appear mispriced at current yield levels.” Jay Barry, Head of USD and Bond Strategy

Malaysias Economy In A Glance

Malaysia’s economy is on track to expand and recover. According to Malaysia’s Gross Domestic Product (GDP) expanded by 3.0 percent in the initial nine months of 2021, contrasted with a 6.4 percent compression in a similar period last year. Malaysia’s month-to-month GDP execution, January and February showed a decay of 3.5 percent and 3.6 percent individually and bounced back firmly in March 2021 to 6.0 percent. The slow recuperation of Malaysia’s economy was impacted by the resuming of more monetary exercises during the Movement Control Order (MCO) 2.0 which is less rigid than the MCO that was forced last year and furthermore profited from different improvement bundles to guide the financial recuperation.

Malaysia’s GDP increased 16.1 percent in the second quarter of 2021 after four sequential quarters of constriction. On a quarter-on-quarter occasionally changed premise, GDP contracted 2.0 percent from 2.7 percent in the former quarter. Consequently, Malaysia’s economy developed by 7.1 percent in the primary portion of 2021.

This is regardless of the way that the GDP shrunk by 4.5 percent year-on-year (YoY) in the second from last quarter of 2021 (Q3 2021), reflecting difficulties brought about by severe regulation measures to stem the flood in new cases brought about by more harmful COVID-19 variations of concern (VOCs). As far as month-to-month GDP execution, the withdrawal was restricted to 1.1 percent in September from 7.6 percent in July and 4.7 percent in August 2021, demonstrating enhancements in financial and social exercises as the National COVID-19 Immunization Program (PICK) acquired force, permitting more states to move towards Phase 4 of the National Recovery Plan.