Covid and Investment Outlook for 2022

The Covid-19 pandemic has had devastating effects on the US and world economies. It has changed how we live, work, travel, and interact. It has benefitted high tech companies that help us work from home. And, it has hurt industries like travel, hospitality, restaurants, and storefront businesses in general. The global supply chain is not working and the USA is looking seriously at reshoring critical manufacturing. As we roll into the New Year it is a good idea to look at Covid and the investment outlook for 2022.

What Happens Next with Covid-19?

The Covid-19 pandemic has been with us for two years. It is ramping up again with a new strain, the omicron variant. But, the world might have caught a break. While the omicron variant spreads more easily than previous strains, it is not as lethal. One effect of these characteristics of the virus is that more and more people who did not want or could not get vaccinated will gain a degree of immunity. More and more vaccines will be put into arms around the world in the coming year. And, vaccination of the youngest children will also start in the coming year. The down side is that the virus could still mutate again and the next variant could be more lethal. To a large degree continued recovery from the Covid recession will depend on which road the virus takes.

Covid and Investment Outlook for 2022

World Bank Economic Projection

The World Bank sees a risk of a hard economic landing in weaker economies as global growth slows through 2022 and into 2023. They blame inflation, likely new Covid variants and excessive debt for an expected slowing of global growth. They say that global growth will go from 5.1% in 2021 to 4.1% in 2022 and 3.2% in 2023. They expect that economic slowing in the US and China will ripple through the rest of the world and especially through economies that provide raw materials. Despite economic slowing in advanced economies they expect a return to near-normal production and activity by the end of 2023. They expect that many weaker economies will not recover as well and in turn will be badly hurt by rising inflation.

An Optimistic Prediction for 2022

Fortune reports on JPMorgan’s prediction of full recovery and less Covid-19 in 2022. JPMorgan says the S&P 500 will go up 8% and emerging markets will rise 18%. Their opinion is that the US and other major economies will approach “broad population immunity.” They expect new vaccines and therapeutics for more effective treatment of Covid-19 to be available to everyone during the coming year. The result of this will be a “strong cyclical recovery” with released pent up demand and a full return to global travel and shipping. What they do not mention is whether this would drive more inflation due to higher demand or less inflation due to greater supply.

These folks expect Covid-19 to become endemic and something that affects life, work, and general economy less and less over 2022 and as the years go by.

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