Geneva, 2 February 2022 (TDI): The World Economic Forum (WEF) released a report detailing the uncertainty still surrounding the worldwide economy as the Omicron variant continues to ravage the globe.
The world economy hit an all-time low of $100 trillion. IMF projected growth to be 4.9% while the OECD projects it at 4.5%. The Omicron variant has already caused major problems to businesses worldwide. In the United Kingdom, the hospitality sector was hit massively as people preferred to stay away from restaurants and hotels.
The WEF expects lockdowns to lift despite a large number of cases because this variant is less lethal in nature, Australia is a prime example of this. Additionally, it is very likely that new variants could arise which could further hamper global recovery.
Inflation is another major problem that is hitting the entire world right now. This has mostly been fueled by disruptions in the global supply chain and the increase in prices for raw materials.
According to the forum, many countries have not yet raised their interest rate to combat growing inflation, namely, Japan and most of Europe. The UK raised its interest rates from 0.1% to 0.25% in December, on the insistence of the IMF.
The US is also set to raise its interest rate. The United States Fed Funds Rate is projected to trend around 1.75% in 2023. Quantitative easing is another area where this is much uncertainty.
Major Central Banks have bought $25 trillion in government bonds with an additional $9 trillion during COVID. Ending quantitative easing and rising interest rates will have a huge impact on recovery.
Trade disagreements between China and The United States have further shrouded global recovery in uncertainty, additionally, tensions between the west over Russia and Ukraine and the resultant economic sanctions against Russia may also negatively impact the global economy. Only the United States has been able to recover and reach its pre-pandemic state.
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