Goldman I EconomicsSachsResearch8November2021|6:46AMESTGlobalEconomicsAnalystGS Macrn Qutlook 2022:The Lona Road to Higher RatesAlthough the fastest pace of recovery now lies behind us, we expect strongJan Hatziusglobalgrowth in coming quarters, thanks to continued medicalimprovements, aconsumptionboostfrom pent-upsaving, and inventoryrebuilding. For2022 asaapsouyenwhole, global GDP islikely torise4)%,more than Ipp above potentialwranidly through midyear and thenmoderate aradually as the near-term impulses wane. In EM, we expect54463908GolamanseondcolLcinChinawherathe nrooertvmarket is likelyto soften further and macro policy looks set to ease onlymodestly, and in Brazi,Sid Bhushanwhere financial conditions have tightened sharply and a potentially messyelectionlooms. Bvcontrast. we are more optimistic on India because ofDanielMilcGodmenSattracanmibags.comsianificant catch-uppotentialand on Russia because ofa boostfromthe oil andforFedlitoffbv afullveartonalizationingoodsprices andinoverallinflation (albeit later and more partial than we previously thoughteadvanced economies(includina thewell into the interest rate normalization process., andLatin America and Eastern Europe may already beapproachingitsend. By contrast. we think the ECB andRBAarestilfar awafrom hiking rates, and markets seer to have overshot in their expectation of animminent hawkish turn.economies torise wellbeyond therock-bottom levels now priced in the bondmarket.Foronething,inflationshouldsetleYpp above the pre-oandemicleveonaverage, inpartbecause central bankshave tweakedtheirgoals accordinaly Moreover, neutral real rates are more ikely to rise than to fal, given increasedpolitical tolerance forbudget deficits and climat-related investment needsInvestors should consider this report as only a single factor in making their inves tment decision. For RegACcertification and other important disclosures, see the Disclos ure Appendix, or go towww.as. com/research/hedge.html
GoldmanSachsGlobalEconomicsAnalystGS Macro Outlook 2022: The Lona Road to Higher Ratesyear ago, asillustrated in Exhibit 1. In particular, the US, UK, Brazil, and Rusiallcamein wella head of consensus forecasts. And even in the Euro area, where annual-averagegrowthlooks tobe ontrack fora consensus outcome, the badk-loaded sequentalpatter means that the economy made up a lot of ground through the vear.Exhilit1:Global Growthin2021 Matched OurLftyExpectationsPercentchange,yearago10GSLatestGSasofNow.2020Consensusas ofNov.20200WorldUSEuroAreaJapanuKCanadaBrazilRussia Bv contrast we did not anticipate the 2021 inlation surge. While we had buil a positivesomeupward pressure on pricesin reopeningservice sectorsinto our forecast, wemissed the two most important inflation sources. namelv the excess demand fodurablegoods and the labor supply squeeze.Since we now expect both of theseinflation drivers to abate only gradually and partially,. we have pulled for ward our policyrate liftoff projections across most ma...
