HSBCEconomicsGlobal ResearchGlobalQ12022By.JanetHenryandJamesPomeroywww.research.hsbc.comGlobal EconomicsNormalisation, but not as we know it (Updated)The pandemic, high inflation andthe very unusual behaviour oflabour markets...are among the challenges facingmajorcentral banks asthey startyto normalise policy....ading to the trepidationin largparts of EMPlayvideo withJanetHenryHSBC39*GlobalInvestmentSeminanVirtual|11-12January,2022RegisterDisclosures & Disclaimer:This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it.
MhsBcEconomics。GloballQ12022Executive SummaryThisreport Is an updated version of ourGlobalEconomics Quarterly,onginallypublished on17Decembr2021.This folowschangestourpolyrate forecasts forRussle and mahliand Chinainflationforecastupdlatesforthe eurozone andTurkey and processing the latest national accountsdataforthe UK,Spain, RusslaandArgentina,Normalisation. but not as we know itWe are heading into 202in a better place than we might have expected a year ago. COVID-19ats of the world. In many countres, fewer peoplehave dledhan feared. There has been a robust economlc recovery and much less medlum-termscarring thanrooded a reminder of that ithas come in theant that has alreadycontibuted to there-ecks,higher energy andfood pricesdto send inlation in the US and Europevas 'transitory'. Now the FedTheUS.the UKand many advancedrtidpation.How quickly will more workershormalisingyet.and leading wage growth to co? rvwllba world where labour is persistently scarced condtions? If that happens, what would itsandthe trajedoryoftheUSD?centalbanks aregraplingwth Theyalest aebut major central banksdear that the Fed will ry to avoid repeatingtheting thingsruntoohot for toolong. tisk of England has now started to raise rates andes inMarch andscalebacktheregularasset.arly now a biger concerm. But nothing can be taken forgrantedgiventhe continuingpandemic uncertahitles, as shown by the ast minute dhanges to anlcpatedoicvrate dedsions by the Reseve Bark ofNew Zealand and the BoE inrecent months, WihalertheFEed andohermaporcrntalbarks dovilhae big inplicaions for theenergingeconomies, which a ead face a challenging backtrop fom the panderic, a stronger dola, and aslowngmairland China. Emergingmarkedassetsthad avery poryea in 2021. Thequesionlswhether conditions in2022 will be any better for themJobs. waaes and inflationThe egaoy of te pandemcls everyhere-in themoneay simuswhth has sent aset pice @oahngandinthe fscalpogranmes that have takengoverment debtlevels to newhighs. But
>HSBCEconomics。GlobalQ12022givenal the factors dentifed above, there s sf huge uncertaity about the growth and nlationoutlook in 2022 and beyond.Our central scenario for the global economy is not a Goldilocks one of raplidly easing botlenecks inome easing ofbotlenecks though, and an increase nlabourpartidpation,but tcould take awhilessetpicegainsand fscalsimulus...
