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What does 2022 hold for the global economy? 

In this series of blog posts, we discuss the outlook for markets and global economy going forward by Tomas Hildebrant, market strategist at Evli.

Base case scenario

All in all, the global economic recovery and normalisation continue. Nevertheless, next year is going to be tricky, like a Jekyll-and-Hyde year: the first half is a continuation of the strength witnessed at the end of this year, so extremely rapid economic growth, with quite a bit of inflationary pressures. In the second half we expect a slowdown in economic growth rates towards longer-run trends and a gradual dissipation of that inflationary pressure that's hitting the world economy right now.

Employment is growing as services sectors return to pre-pandemic levels. There are increasing investments in industries to meet demand, to adopt new technologies and to tackle climate change.

Central banks reduce their stimulus measures in an orderly and moderate manner as inflationary developments cool down. Price pressures ease as global supply picks up again and competition intensifies.

Economic growth and buoyant economic activity improve the state of public finances, curbing new borrowing needs and reducing the debt-to-GDP ratio.

The Nordics have performed extremely well despite Covid-19, and the reason is that the Nordic economy suffered a far smaller drop in terms of economic activity than the rest of the world and the rest of Europe. That's why the bounce back hasn't been as fast, because it didn't fall as far as other areas did. Furthermore, the Nordic populations are far more vaccinated than in most OECD economies. There is less risk in terms of Covid-19 blowback, through altered virus strains or mutations. We're also looking at a robust growth in essentially all the Nordic economies, in particular in Norway. Sweden is growing rapidly, and Finland is also bouncing back quite nicely.

When it comes to listed equities, IPOs will continue In 2022, both in Finland and Sweden. One should though be more mindful about the quality and the valuations of the upcoming IPO candidates.

In fixed income, the Nordic market is one of those that really stand out for the potential for the total returns, as the yield spread difference is putting the Nordic market in relative terms to a quite an attractive point.

Better case scenario

Negative real interest rates, public investments and renewed credit growth boost economic growth even more than expected.

New jobs are created and employment recovers to levels well above before the Covid crisis. Economic productivity grows by leaps and bounds thanks to new technologies, and corporate earnings rise strongly.

Global supply and demand reach balance and both grow at a pace that goes hand in hand. New demand is generated by green investments, changing consumer habits and the growing wealth and needs of people in emerging economies.

Worse case scenario

Production bottlenecks persist across industries and regions, with supply unable to meet global demand for products and services.

Production has to be interrupted or halted when logistics are disrupted. A recovery in employment stalls. Declining industrial and consumer confidence.

There are shortages of technological components, new vehicles and transport means, energy, skilled labour and even food. Price pressures on producer and consumer prices increase. Public discontent grows and support measures are called for in various sectors.

Central banks are caught in the crosswinds of inflationary pressures and weaker growth. Monetary policy is forced be tightened and public finances are further strained.

Risk scenarios


Confidence in the Chinese economy falters as its economic outlook sours due to credit losses in the real estate and banking sectors. The central government is hesitant to remedy the situation and mitigate the damage.

The country retreats deeper into its shell and meets increasing confrontation with the West. Trade relations become strained and foreign trade falls sharply. Negotiations reach an impasse.

Currency markets react to the changing equilibrium situation and pressures are also reflected in Western fixed income and equity markets.


A new wave of Covid-19 leads to a collapse in health care capacity and a new sharp rise in deaths, forcing governments to impose new restrictions on mobility and activity.

Countries no longer have the capacity to support struggling industries and companies, triggering a wave of bankruptcies and unemployment.

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