Introduction – A heady mix of inflation, tech and net zero
World GDP to hit $100 trillion in 2022
This introduction sets out some of the key underlying themes in the report and some of the major changes since last year.
A year ago, we hoped that the economic effects of the pandemic would wear off relatively quickly. And in one sense they have. We now expect world GDP in dollars in 2022 to be higher than we did pre-pandemic and to reach over $100 trillion for the first time in that year. Last year our forecast was that this would only be reached in 2024.
COVID-19 and its effects
But the year-end emergence of the Omicron variant of COVID-19 is a useful reminder that the pandemic is still with us, and even in highly vaccinated societies. Yet, though the disease persists, much improved immunity in many countries allows for less harsh restrictions, whilst greater economic adaptability means that renewed restrictions cause less of a blow than in previous iterations.
On 8th December 2020, a 90-year-old British woman received the world’s first Pfizer COVID-19 vaccine outside clinical trials. Exactly twelve months later, 55.4% of the world’s population – almost 4.4 billion people – were estimated to have received at least one dose of a COVID-19 vaccine.1 Though unequal vaccine distribution and the potential for new vaccine-resistant variants pose risks, and persistent disproportionate economic effects are felt by those working in sectors such as tourism and hospitality, this significant development has allowed most of the world economy to now enter its post-pandemic recovery phase.
The scale of the economic hit from the pandemic in 2020 now seems to have been a little less severe than we had assumed. World GDP now seems to have fallen by 3.2 per cent in that year compared with the 4.4 per cent fall that we had calculated a year ago.
And the recovery is certainly much stronger. Although world economic growth in 2021 is likely to be at 5.5 per cent, only slightly above the 5.3 per cent which we predicted a year ago, there is substantially more momentum going into 2022 than we had previously envisaged and we now expect world growth of 4.2 per cent next year compared with the 3.4 per cent predicted a year ago.
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