The global economy enters the stage of uncertainty despite signs of recovery

Anticipation prevails over the paths that the global economy will take in 2022, which seemed to be not immune from upheavals due to the supply crisis, inflation and health concerns.

Developing countries' economies at crossroads amid price inflammation

Paris - Anticipation prevails over the paths that the global economy will take in the coming year, amid mounting speculation, especially after the recovery it witnessed in 2021, following the collapse in 2020 due to the repercussions of the Corona epidemic.

But the global economy seemed to be sinking into doubt, especially since it is not immune to the upheavals due to the supply crisis, inflation and health concerns, to which are also added the requirements of preserving the environment.

From China to the United States and from Europe to Africa, the pandemic almost simultaneously brought the world's economies into a meltdown in the spring of 2020. After two years and more than 5.3 million deaths, the way out of the crisis has become even more fragmented.

Rich countries took advantage of privileged access to vaccines as the US erased the effects of its worst recession since the Great Depression of the 1930s, and the eurozone looked set to do the same at the end of the year.

But the rapid spread of Omicron and the closures it has imposed raise fears of new repercussions for many sectors, ranging from air transport, restaurants, hospitality and tourism.

Analysts from the British "HSBC" bank stress that "victory in the battle against the virus is still elusive," noting that the economy is still "far from returning to its normal course."

At the other end of the spectrum, poor countries lack vaccines. In sub-Saharan Africa, which the International Monetary Fund expects to have the slowest recovery, less than 4 percent of the population in Cameroon, Ethiopia or Uganda, for example, has been vaccinated, according to Johns Hopkins University.

Sebastien Poncelet: Even the basic food of a part of humanity is under threat

The International Monetary Fund expects until 2024 that most emerging and developing countries will fail to meet the growth expectations that they set before the emergence of the pandemic, especially since a number of central banks (in Brazil, Russia, South Korea and others) have raised interest rates to stave off accelerating inflation that would impede their recovery.

Even in China, the locomotive of global growth, the recovery is slowing as risks pile up, the IMF recently warned of household consumption struggling to restore pre-pandemic levels and the real estate sector crunch, with the debt-laden giant Evergrande struggling to the high price of coal and component shortages weighing on the companies.

"The biggest surprise in 2021 has been a spike in inflation," Goldman Sachs analysts wrote in their 2022 forecast. This was driven by chaos in distribution chains and a shortage of products essential to international trade such as semiconductors.

This is due to the huge increase in demand during and after the crisis, but also because of the shortage of small workers in the global trade sector of workers who unload goods at ports and truck drivers and workers in supermarkets who did not return to their work sites after the lifting of quarantine.

Inflation is also driven by rising prices for raw materials (wood, copper, steel) and energy (petrol, gas and electricity).

While central bankers considered the price hike a temporary issue, it raised concern at the highest levels, and the US central bank recently admitted it as not an accident, declaring that it will work to accelerate interest rate hikes in 2022 despite the risk of slowing growth.

In this volatile environment, "The question is whether we are really out of the crisis," said Roel Petzma, professor of economics at the University of Amsterdam.

A large number of companies assert that they are facing difficulties in the face of shortages of goods and materials and inflation. But for now, the International Monetary Fund is still forecasting global growth of 4.9 percent next year.

Between meeting the needs of families and avoiding the apocalypse, it has become difficult to find a balance as evidenced by the divergent conclusions of COP26 in November.

The agreement reached calls for countries to increase their commitments to reduce greenhouse gas emissions from 2022, but it does not put the world on a consistent path to limit global warming by well below 2 degrees Celsius as mentioned in the Paris Agreement of 2015.

The International Monetary Fund expects that most emerging and developing countries will fail to meet the growth expectations they set before the outbreak of the pandemic

"Short-term thinking is a usual phenomenon, especially among politicians," Betsma said with regret, calling for a carbon tax that is uniform in all sectors and is sufficiently dissuasive, a far cry from what is the case today.

Climate change and associated natural disasters can also affect food prices, with damages estimated at $250 billion by the Swiss reinsurance company Swiss Re.

Global prices are already close to their 2011 highs, according to the Food and Agriculture Organization of the United Nations. Wheat is up nearly 40 percent in one year, dairy by 15 percent, and vegetable oils are above record levels.

"It is clear that the prices of everything have gone up," said Tunis resident Nabiha Abed, referring to the prices of meat and chicken, which have doubled at times. And to indicate what the situation has reached, this mother says that Shakshuka, a traditional dish made of peppers, onions, eggs and olive oil, "has become a luxury while it was a recipe for people who do not have money."

Therefore, the question that is being asked strongly in light of this climate is whether these data raise fears of protests and riots due to hunger, as happened in 2008?

"Between wheat and bread, there is only one step," said Sebastien Poncelet, a wheat expert at French consultancy Argitel. "It is the basic food of a part of humanity and it is under threat."