2021 was a year of recovery that was as dramatic as the depth of the recession in 2020. Behind thismirror effect, there is no return to normal, but an acceleration of already established trends, breaks and changes of model, allowing us to anticipate the year 2022. OVER THE PAST TWO YEARS, THE STORY SEEMS TO HAVE ACCELERATED IN MANY WAYS 2020 saw a record recession triggered in a month, a central bank response orchestrated in days, and complex vaccines deployed in months, against a backdrop of accelerating technological disruption and climate emergency. 2021 also had several surprises in store for us. Between longer procurement times, raw material shortages, and acceleratingwages in theUS, inflation has entered the post-confinement economic landscape as a less temporary parameter than initially anticipated by central banks. This inflationary trend did not weigh on the development of the equity markets, which continued their upward trajectory, supportedby stronger thanexpectedearnings growth. The other disruptive factor in 2021 was of course China: regulatory tightening and restructuring of the property sector weighedheavily on investor sentiment after the euphoria of the beginning of the year. Behind these two phenomena, some structural trends have led the government to act and react: excessive investment in property, declining demographics, rising inequalities, a poorly regulated technology Macroeconomic analysis 2021 REVIEW AND OUTLOOK FOR 2022 financial markets sector, and households with less access to education and health. This is not a challenge to the Chinese model, nor to the secular strengths of this economy (a fast-growing middle class and record investment in R&D), but rather a source of uncertainty to be monitored. There is no doubt that the spectacular images of climate change have contributed to the acceleration of investments in energy transition. In this respect, COP26 may have been disappointing for some, given thebacktrackingof several emergingcountrieson their carbon commitments. However, the return of the US to the climate agreement is an encouraging sign. 2022, THE NORMALISATION OF THE GROWTH OF OUR ECONOMIES IN A TENSE GEOPOLITICAL CONTEXT The year 2022 should first be characterised by a normalisation of the growth of our economies. It was the combination of significant support packages, relaxations of measures put in place during the pandemic and a large stock of savings that were expected to support consumption and investment in mature economies. The war in Ukraine, the duration, risks of extension and exit scenarios of which are impossible to predict, increases the level of uncertainty with threats of a higher slowdown, particularly in Europe, and higher inflation due to the pressure on commodity prices. The impact on inflation of soaring energy prices and supply chain disruptions is expected to ease gradually, but inflation is still expected to be well above the 24 Vincent Manuel Chief Investment Officer Indosuez Group
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