The world economy woke up from its pandemic-induced coma in 2021, but
soaring inflation, global supply chain bottlenecks and a resurgent coronavirus
have taken the shine off the comeback.
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Now growth is at risk of weakening next year.
Here is a look at the state of the global economy:
Uneven
recovery
Countries have posted impressive growth figures as they clawed their way out
of the depths of the 2020 COVID-19 induced recession, but some are faring
better than others as wealthier countries have had better access to vaccines.
The US has overcome its worst downturn since the Great Depression while the
eurozone's economy could return to pre-pandemic levels by the end of the year.
But a resurgence of the coronavirus could scupper the recovery, with the
emergence of the Omicron variant raising new concerns.
"COVID-19 will remain a public health threat, particularly in countries
where vaccination rates remain low," said analysts at Moody's credit
ratings agency.
With a 2.5 percent vaccination rate, the economy of sub-Saharan Africa is
growing at a slower click, according to the International Monetary Fund.
Most emerging and developing countries should remain far behind their
pre-pandemic forecasts by 2024, the IMF says.
Central banks in Brazil, Russia and South Korea have raised interest rates
to combat rising inflation, a move that could rein in growth.
China, the world's second biggest economy and a driver of global growth, is
facing a slew of risks: New coronavirus cases, an energy crunch and fears over
the debt crisis at real estate giant Evergrande.
Inflation
soars
Inflation has accelerated to multi-year highs around the world, as consumers
returned with a vengeance and industries faced shortages.
Prices have soared across the board, with oil, natural gas and raw materials
such as wood, copper and steel going through the roof.
"The biggest surprise of 2021 has been the goods-led inflation
surge," Goldman Sachs analysts wrote in a 2022 outlook.
Central banks insist the inflationary pressure is a temporary consequence of
economic activity returning to normal this year after it came to a halt when
the pandemic erupted in 2020.
Stock markets have hit new record highs this year, but investors are
concerned that central banks will withdraw their stimulus programs and raise
interest rates earlier than expected to tame inflation.
"The question is whether we really are in the end of the crisis,"
said Roel Beetsma professor of macroeconomics at the University of Amsterdam.
Widespread
shortages
Industries have struggled to keep up with a surge in demand from consumers.
Global trade has been disrupted by insufficient shipping containers,
congestion at ports and labor shortages.
One key component that is hard to come by these days is semiconductors,
chips used in everything from phones to video game consoles to the electronic
systems of cars.
The shortage has been so bad that several automakers have had to temporarily
halt production at some factories.
Labour shortages have added to the problem as truck drivers, port workers
and cashiers have not returned to work following lockdowns.
Despite the difficulties, the IMF expects the world economy to grow by a
healthy 4.9 percent next year.
Climate
change
In addition to the pandemic, economies had to come to grips with another
life-threatening event this year: climate change.
The conflict between economic growth and saving the planet came to the fore
at the COP26 climate summit in Glasgow, Scotland, this month.
Nearly 200 nations signed a deal to try to halt runaway global warming after
two weeks of painful negotiations but fell short of what scientists say is
needed to contain dangerous rises.
Droughts and other climate catastrophes threaten to further drive-up food
prices, which jumped to a 10-year high in October, according to the Food and
Agriculture Organization.
Wheat has soared by 40 percent in the past year while dairy products are up
15 percent and vegetable oils reach new records.
"It's pretty obvious. Everything has gone up," said Nabiha Abid, a
resident of Tunisia's capital, noting that the price of meat has doubled.
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