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World Economy Not Likely to Heat Up in 2022

2 mins read

As the second quarter of 2022 enters its final month, the world economy is showing signs of heating up, but in a limited way. This is in spite of the continuing COVID pandemic repercussions, surging inflation in developed nations, a continued supply chain crisis, and political flare ups between multiple superpowers. One of the undercurrents of the international economy for 2022 is already in place, namely the easing of COVID restrictions all around. In addition to the U.S. and the UK, dozens of other nations have already begun loosening social and business restrictions that put a dent in the growth of dozens of national economies.

General Slowdown

On overall slowdown of the global economy is likely to progress as far as the early months of 2023. The main factor behind the slowing is a worldwide decline in output, with figures expected to show only 4 percent growth for this year and even lower levels, around 3.5 percent, for next year. In the area of jobs, most developed nations will experience numbers that are below pre-COVID levels. This scenario is thought to continue for at least 24 months, if not longer, until there is any bounce back to normal employment rates. Currently, in both Europe and the U.S., the rate of participation in the workforce remains at all-time lows. The central factor behind poor employment numbers are, again, the pandemic. Millions of people who exited the workforce or were fired due to slowdowns have not come back into the economy yet.

The Trading Scenario

In a global economy where nothing is certain, especially in a post-COVID environment, the trading of financial derivatives such as CFDs (contracts for difference) continues without interruption. Both part-time and professional traders view the worldwide derivatives market as a way to speculate and hope to see returns even amid rampant inflation, political instability, and other negative factors.

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Supply Chains and Inflation

Especially in developed nations, the severe worker shortage has caused something of a ripple effect. Not only do labor shortages contribute to supply chain problems, but they increase inflationary pressures all around. Additionally, nations that sought to implement universal vaccination fell far short of their goals. And, with employment problems lingering and the end of many stimulus spending programs, places like the Caribbean, Africa, parts of Asia, and Latin America will almost certainly continue to experience slow economic recovery rates.

COVID Developments

As the omicron variant of COVID-19 surged in late 2021, many nations that had already begun to recover from the initial surge of the virus were thrust back into a financially restrictive situation. As most developed nations began distributing vaccines, death rates dipped, but case numbers continued to rise. During a long period of uncertainty toward the end of 2021, several nations, among them the U.S. and Sweden, decided that they would move ahead with limited reopening of their economies. As the second quarter of 2022 approaches, millions of small business owners in developed nations are seeing their first in-person clients in over a year. Likewise, many merchants, at least the ones that survived long-term shutdowns, are turning a profit once again.

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