If 2020 and 2021 were the years characterised by the Covid-19 pandemic, 2022 looked like the year of economic recovery on a global scale, but the war between Russia and Ukraine and the negative post-pandemic effects have reserved more uncertainties than joys for the current year. The numbers, or rather the flashes that marked 2022 and are still affecting the world’s economic markets, were captured by the International Monetary Fund (IMF), which crystallised the highlights of the current year in a few moments.

FMI – CHART OF THE WEEK

Inflation, rising energy costs, the war, the food crisis, global economic uncertainty, international supplies: these are some of the topics the IMF has focused on to design its weekly “pills”, updates with which it informs investors and markets of the main events on a global scale.

Through these geopolitical and economic infographics, the Monetary Fund has highlighted the dangers associated with the current crises, helping to define a more cautious global market and possible new geopolitical arrangements.

INFLATION

The war exacerbated the rise in commodity prices. Energy and food have contributed to higher inflation along with higher oil and gas prices. These factors have been the main drivers of inflation in Europe and, to a lesser extent, in the United States.

At present, the International Monetary Fund expects inflation to persist longer than expected: the 2022 inflation rate is projected at 5.7% for advanced economies and 8.7% for emerging markets. Only in 2023, the IMF notes, will these rates see an estimated reduction to 2.5% and 6.5% respectively.

FOOD PRICE BOOM

Food commodity prices increased by more than 23% in 2022. The biggest impacts were seen on some products from Russia and Ukraine such as wheat and maize, for which the two countries account for 30% and 18% of world exports respectively. The months-long halt to exports caused prices of raw and processed products to rise, increasing costs for all markets, with varying economic repercussions.

If we consider food costs, which account for 17% of consumer spending in advanced economies and 40% of consumer spending in non-EU countries and North Africa respectively, it becomes apparent how heavily the food market has and is affecting the world economy. This scenario, IMF analysts point out, is also changing the geopolitics of supply, which is now looking more closely at new markets, especially the United States and China.

ENERGY AND OIL 

Record increases also for energy and oil. The conflict in Eastern Europe coupled with strong speculation on the commodities markets is causing thoughtful repercussions on all economies. One of the most significant consequences is the shock caused on the commodities market. Black gold reached $130 per barrel in 2022, while the energy market has been rising steadily from the end of 2021 onwards, reaching figures that severely affect economies dependent on foreign supplies in particular.

For the IMF, thanks also to the forthcoming agreements between Tehran and Washington, oil is expected to continue its descent, which began already last April, reaching 89 dollars per barrel.  On the other hand, there is much uncertainty on the gas market, which will mainly impact Europe with effects that will be uneven between nations.