Morgan Stanley 2022 Global Macroeconomic Outlook: Economic Growth under inflation

Global inflation has worried that investors are worried about future economic growth, but Morgan Stanley’s economists say that the trend of the price will sail, and the GDP growth in 2022 will reach 4.7%.
When discussing the prospects of global economic development in 2022, we have to mention “elephants in the room”: inflation. For decades, the price of most major markets has not risen sharply, however, the economic recession caused by the new crown epidemic, plus the problem of supply chain interruption and labor shortage, forming a perfect storm of rising prices.
Morgan Stanley expects the inflation level of the developed market to reach 4.7% at the end of this year. In a typical economic cycle, this is the central bank’s interest rate and explicit signals to the growth of the brakes. This cycle is not an exception, Morgan Stanley’s global chief economist Seth Carpenter said: “Although the economy is recovering, it is not ‘normal’.”
Although the inflation dynamics of the countries in various countries will vary from different speeds, the economic research team of the Morgan Stanley Research Department is forecast, during the 2022, the inflation of the main market will fall back “More than two percentage points.
Monetary policy may be tightened, but the tightening level does not seriously worrying about investors, and strong capital expenditures, supply chain improvements and normalization of other fields make Morgan Stanley’s prediction of Global GDP growth in 2022 It is expected to reach 4.7%.
The impact of the supply chain interrupt will resolve
From a global perspective, the supply chain interrupt is the main factor in promoting inflation. SETH said: “According to the investigation and feedback of Morgan Stanley stock analysts, we believe that it is currently or approaching the most serious period of supply chain interrupt.
From the perspective, Morgan Stanley US Chief Economist Ellen Zentner said that the US supply chain is about to recover, and the increase in commodity prices will also fall. Ellen’s team is expected that strong capital expenditure cycles, inventory increases and demand delays should promote the US GDP growth in 2022 reached 4.6%.
This is not to say that all inflation is temporary. Certain categories of the United States include housing are expected to continue to rise, which also reflects normal periodic dynamics. Ellen said: “We believe that the key difference between temporary and permanent inflation is the increase in the increase, the former usually rises a percentage of the number, and the latter is ten digits.”
European inflation quickly improved
Survival and restricted sequelae are in different ways affect the global market. Taking Europe as an example, Morgan Stanley’s economist expects Europe’s inflation rate to fall from 4.1% at the end of 2022 to 3.1% in the first quarter of 2022, and eventually fell below 2% of the European Central Bank’s target inflation rate. Jacob Nell, Morgan Stanley, said: “Even if the European economy continues to grow strong next year, the labor market continues to tightening, we still expect the core inflation rate in 2023 to be lower than the European Central Bank.” Jacob believes this due to this Historical inflation has long been in low levels of sustained effects.
At the same time, due to the strong labor market stimulating consumption, the European economy is expected to restore the level before the end of this year, and achieve 4.6% GDP growth in 2022.
Monetary policy will be moderately tightened
Assume that inflation and economic growth curves meet Morgan Stanley’s forecasts, the central bank of the developed market may not take strict monetary policy to inhibit growth.
Although the Fed has begun to reduce asset purchases, Morgan Stanley’s economists say that the Fed will wait until September 2022 hike, and the European Central Bank may postpone interest rates at the end of 2023. In other places in the world, many central bank monetary policies have begun to return to normalization. SETH said: “We believe that the central banks will not suddenly recover neutral interest rates, and will not take restrictive measures.”
At the same time, corporate investment is faster than the global economic growth, and the lower period is more significant. SETH added: “The recovery of investment expenditures will continue, and if new capital investments bring greater technological advances, productivity will rise, thereby further mitigating inflation pressure, so that strong growth is continuous.” These factors Other factors may keep global GDP growth levels before the new championship.
Take the labor market with long-term eyes
In addition to inflation, the labor market is limited to investors most concerned, and the two are usually close. The challenge facing the labor market is the most serious in the United States, but the worst period may have passed.
Ellen said: “As the epidemic has gradually subsided and economic continuous recovery, we expect the economy will have a typical periodic recovery.” He also warned that population aging will continue to bring challenges for the labor market. “The number of labor participation rates from 25 to 54 have begun to rise, while the perfect child care system, the decline in health risks and the rise of wages should accelerate this trend.
Asian emerging market reuses the right track
Overall, Morgan Stanley’s economists believe that emerging markets will maintain strong growth in the next year. Although Brazil (0.5%) and Russian (2.7%) growth dragged the average growth rate, in general, the GDP growth rate of emerging markets will reach 4.9%.
Asian emerging market growth prospects are obviously more optimistic, and it is expected that the GDP growth will reach 5.7% in Asia (except Japan). In a favorable business structure reform, strong capital investment and continuously rising vaccination rates, India and Indonesia’s economy is rebounding.
CHEN AHYA, Chief Economist, Morgan Stanley, said: “With the full start of the growth engine, we expect economic growth to recover, and the macro stability indicators maintain a narrow fluctuations.” Chetan and team expect India, India, 2022 The GDP growth rate will reach 7.5%. South Korea and other North Asian economies, the growth prospect will be boosted under the double driving of strong internal growth and the bolt-in-global semiconductor demand.
China’s economic growth is turning out, Morgan Stanley China Chief Economist Xing Zishiqiang and team believe that China’s economic growth will rise to 5.5% next year, higher than market expectations.

Post time: Jan-05-2022