2022 economic outlook event
The ECCT hosted a Special Lunch on the economic outlook for 2022 featuring guest speaker Tony MC Phoo, Senior Economist for Standard Chartered Bank Taiwan. The speaker gave a presentation titled “Still battling headwinds”, providing some insights from his bank’s recent research. Read the full event report.
The economic outlook for 2022 is positive and most markets are pricing in an improved global recovery. Global industrial production and exports have recovered at a much faster rate than they did following the 2008-2009 global financial crisis. However, the recovery will be a multi-speed one as there is likely to be a marked difference between the performance of developed markets and emerging markets, especially those developing markets with poor fundamentals. This will continue the trend over the past year, which has seen a strong recovery in developed markets. Much has to do with the ongoing coronavirus pandemic situation. In particular, countries that have had slow Covid-19 vaccine roll-outs will struggle to recover.
Inflation is rising rapidly in developed markets and is expected to remain elevated even if the Covid-19 situation improves. Inflation increases the risk of aggressive monetary policy tightening by central banks.
Turning to Taiwan, while headline numbers are good, the pandemic appears to be under control and vaccination rates are rising, Phoo sees speed bumps ahead. Firstly, if strict border controls are maintained, it will be another tough year for the travel and tourism industry. Secondly, Taiwan’s economy remains heavily dependent on trade. While this has provided a strong boost to the economy over the past 18 months, momentum is likely to slow in 2022. According to Phoo, export orders for technology products are already slowing and leading indicators in the US also back this up. Thirdly, investment spending is unlikely to remain as robust as it was in 2021.