Financial projections are tempered for 2022. The IMF, World Bank and others are cautioning to prepare for contraction, globally. As the above chart indicates, slower growth is expected for the global economy generally, within most advanced economies, and even in developing nations.
Amid a recent global economic recovery that featured record energy prices in oil and gas, 2021 also faced a resurgent COVID-9 pandemic alongside global supply-chain backups.
In the U.S., the supply breakdown has the Joe Biden administration considering deploying the National Guard to transport needed goods and resources domestically. Expect continued bottlenecks to affect holiday prices and first quarter returns in 2022.
FORECASTS FOR 2022
Among developed nations, IMF expects only Spain, Saudi Arabia, Germany and Japan to experience GDP growth in 2022. Brazil, China and Russia are expected to brace for significant economic downturns.
IMF also points to extreme gaps in expected recoveries post-COVID across the economic spectrum; most markedly between advanced economies and lower-income, developing nations. As vaccine roll-outs vary across the hemispheres, fires, droughts and record floods are affecting food supplies.
To turn the tide, the IMF is calling for strong multilateral policy efforts: “on vaccine deployment, climate change, and international liquidity to strengthen global economic prospects.”
Also expected for 2022: considerable inflation. “Inflation has increased markedly in the United States and some emerging market economies,” summarized IMF, noting that “increases in inflation are occurring even as employment is below pre-pandemic levels in many economies.”
This following provides a brief glimpse into the future of key commodities.
“’High natural gas and coal prices are impacting the production of other commodities and pose an upside risk to price forecasts,’ said John Baffes, Senior Economist in the World Bank’s Prospects Group.” –Word Bank Press Release 10.21.21: Soaring Energy Prices Pose Inflation Risks
Energy prices soared in the third quarter of 2021, averaging 80% higher than in 2020, according to the World Bank’s Commodity Markets Outlook. These record energy prices may denote a market cap as fuel goods hit a price wall. Prices for energy consumption—at the gas-pump, electric or otherwise—are “expected to remain elevated in 2022,” writes the World Bank, but then expected to decline by the second quarter of 2022 globally, as “supply constraints ease.” Other highlights:
- Commodity prices in 2021 met or exceeded levels previously seen in the spike of 2011.
- Oil, natural gas and coal prices reached record highs in 2021 amid global supply constraints.
- Crude oil prices rose 70% in 2021, to an average $70 per barrel. For 2022, crude is projected to rise to $74 a barrel by the second quarter.
- Continued demand for electricity will prevail, as well as carbon-neutral long-term solutions.
From this same World Bank report: “The surge in natural gas and coal prices this year has made solar and wind power even more competitive as an alternative energy source.”
AGRICULTURE & GRAINS
Though climate events around the globe continue devastating agricultural production, they have not succeeded, with agricultural commodities pricing increasing roughly 22% during 2021.
With global growth softening, energy prices stabilizing and supply disruptions being resolved, IMF writes that agriculture prices are expected to decline modestly during the final quarters of 2022.
Bloomberg‘s commodities forecast also notes that agriculture prices in 2021 caught up to the CPI, signalling a general slowdown in agro goods pricing.
METALS & MINERALS
Metal prices in 2022 are not expected to match this past year’s record highs. The World Bank notes that metals should fall slightly, an expected 5%, in 2022. This breaks from the recent upsurge: an estimated 48% increase in price and worth of metals during 2021.
Bloomberg predicts that while silver underperformed in 2021, and copper overperformed, gold may be poised to again steal the show in 2022.
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Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only