Some views on the global economic situation by Barclays
- Expects growth to be led by advanced economies
- China is slowing; expects GDP growth of 7.8% y/y in 2021, 4.7% in 2022
- China's "zero tolerance" approach to COVID-19 means lockdowns will hurt activity
- The fading of the pandemic is an under-appreciated potential upside for 2022
On the last point, the firm says that "progress on medical treatments could reduce strain on hospitals, prevent new lockdowns, increase leisure and hospitality consumption, and mitigate pandemic-related supply chain problems".
Well, that is certainly the hope and one that policymakers are banking on as well.
As for inflation and the bond market, Barclays notes that:
"We expect the pace of price rises to decelerate, especially in 2H 2022, as base effects come into play and goods inflation moves closer to trend. We expect bond markets to keep the faith in 2022 as inflation decelerates, labour supply bottlenecks ease and medium-term inflation expectations stay anchored."
Not one to burst their bubble, but a lot of this is going to depend on a synchronised global recovery - especially the need for Asia to get back on its feet again.
The view towards the pandemic is very different in this part of the world - more conservative surely - as compared to the US and Europe, but the hope is that eventually we will all move on to the endemic phase of dealing with COVID-19 as a whole.
Otherwise, it will be tough to see a meaningful or significant reversal in supply trends especially for chips and other key raw materials globally.
