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2022, has been a significant one in multiple aspects. The world never anticipated a sudden change during events so drastically, with international tensions between the superpower nations. The impact has been intense worldwide. Supply shocks, inflation peaks, and fears of a severe recession in developed economies were some important talking points. Some of the events did play an important role.
The following events did play a role in terms of shaping the economies across the globe.
Russia Ukraine war
The war in Ukraine shook the world by surprise for many nations across the nation. With Russia trying to portray dominance in Ukraine, the war had a lot of significant impact supply to the world economy. One of the highlights of this war was that it impacted the supply of food grains to many parts of the world. The massive impact was felt in parts of Africa, and some of the European nations, where a shortage of wheat drove many to hunger. Sector-wise contributions, in terms of processed foods,
and materials to car manufacturing, driving manufacturers to cut short production. The neighbouring nations of Ukraine also did face an economic crunch, dealing with the huge inflow of refugees from Ukraine. Significant damage was being made, disrupting the power supply and the essentials. Looking to the aspect of rebuilding the nation, would need funding to get Ukraine back on track. Investment in building infrastructure, and facilities and creating jobs for the people would be one of the important goals, for the nation once the nation stabilizes from the war.
Inflation in the United States
Economic shocks started to creep into the United States economy since mid of March 2022 when the nation started to feel the pressure of inflation. The rise in prices, across the states, meant something significant needed to be done by the central bank. The US Federal Reserve had begun its rate hikes in March and had been doing so to keep a check on the inflation in the economy. It had a ripple effect on the stock markets across the globe, and many nations are said to have followed similar paths to control inflation in the economy. Another important aspect of the recession is that of a slowdown of the global economy, which did come in, for which measures were taken and the speculation in the global markets was visible. The market interaction was far more significant and closely looked at, and many of the nations did look at it in greater detail. Major news agencies showcased the significance of what is happening and did give views on what to anticipate for the coming year. Many of the experts did point out the aspect of a recession, which came in with inflation. With the hawkish tone, from the Federal Reserve, it remains to see how much it would translate to help in coming out of the recession and going back to normal phases of a growing economy. All the decisions would show, how the rest of the world would react and change the policies to suit the progress of their respective nations.
Economics Nobel
The Nobel prize for Economics 2022, came in as a welcome gift to the subject, considering the crisis of inflation and central banks of nations across the globe playing their part in keeping the situation in control. The prize was given to two famous researchers and a former central banker, for which many controversies and criticisms came in from all corners. Ben Bernanke, former Federal Reserve head, Douglas Diamond, and Philip Dybvig were the awardees for 2022. Dybvig and Diamond were awarded for their contributions to the role of central banks and their role played in the economy. They showcased the fact that the deposits being made in banks helped in the functioning of the economy, and how its needs to be protected from losses. Bernanke, helped in showing through his empirical analysis, how credit sources lead to the depressionary phase of an economy.
China-US tensions.
The tension between major economies of the world proved to be an important highlight in 2022. With the growing tensions in Taiwan and the US being a key ally supporting the nation’s cause, the tension grew with Pelosi’s visit. Adding to this, to protect the interest of the world China lost the major deal of producing semiconductors, which was a big blow to the growing technologies like artificial intelligence. Biden’s administration took to convincing their allies to take stringent steps to reduce trade relations with China. All this was in line to reduce China’s dominance in their sale of goods across the world. From all this, one can understand is there will continue to be some amount of suspicion would likely remain between the nations, which would likely remain for the coming years.
All these events paved the way for the development of policies and changes in nations across the globe. The financial crisis in many nations, one such in Sri Lanka remains one of the highlights in ASEAN nations. With the pandemic, the world economy had gone through a significant phase of ups and downs. The war did throw in an element of surprise to the mix of growing economic tension of a recession and rising costs. Most of these events shaped the economic highlights of 2022. And with this, it’s a wrap!!!
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