AXA IM Macroeconomic Outlook 2022: Pandemic effects to recede, policy starts to tighten

by | Dec 1, 2021


As we head towards the second anniversary of the COVID-19 outbreak, the virus remains a key concern for investors. Nonetheless, in 2022 we expect major economies to continue their post-pandemic recovery. See below further insights from our Macroeconomic Outlook.


  • Macro Outlook: We expect pressure on global supply to gradually decline, contributing to a slowdown in inflation. This would allow central banks to maintain a prudent approach to the pace of policy normalization. (Gilles Moëc)
  • Investment Outlook: COVID-19 will inevitably remain a challenge for markets. But rising inflation also remains a concern. (Chris Iggo)


Themes to shape 2022 and 2023

  • Coping with Covid: As we head towards the second anniversary of the pandemic, the virus remains a key concern for investors. While some countries are increasing vaccination rates, others are seeing new outbreaks.
  • Inflation ‘mostly’ transitory: The coming year is likely to see inflation remain a concern, while interest rates will start to rise in many major markets as central banks tighten monetary policy.
  • Labour markets after the pandemic – the threat of persistent inflation: Labour market structures have shifted, supply-chain issues continue to persist and rising inflation continues to be a major concern.  
  • Policy making amidst uncertainty: Policymakers face significant challenges. With financial markets arguably ‘priced for perfection’, any policy missteps could result in significant volatility.
  • The shifting electoral landscape: The political landscape remains fractious and 2022 will see several key elections take place, which could shift political direction.
  • Moving to a net-zero world: It has become impossible to think about the economic outlook without considering the impact of the fight against climate change. An essential part of the process is to reallocate capital towards the sectors and businesses which are transitioning to a net zero economy.


Regional forecasts

  • US: The economic recovery in 2021 gave rise to severe supply chain bottlenecks, but such pressures should ease if COVID-19 is brought under control.
  • Eurozone: After a buoyant summer, the short-term outlook is threatened by another COVID-19 outbreak, rising inflation, supply shortages and a slowdown in China.
  • China: China has experienced further economic softening in late 2021 as it navigates a path back from the pandemic.
  • Emerging Markets: Emergency policy response to the pandemic supported the economic rebound in 2021. This will be less prominent in 2022 however, when the recovery will rely more on domestic drivers.
  • Japan: Japan’s subdued growth in 2021 should be boosted by tailwinds into 2022 after the state of emergency was lifted.
  • UK: Uncertainty surrounds how much further the UK’s recovery can go, given the combined impacts of Brexit and the pandemic – and then there is the fractious political backdrop.


Find the full report here

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