As December draws to an end, it’s time to cast an eye towards what may happen in the next 12 months. After a tumultuous two years dominated by a once-in-a-century virus that has upended the world as we know it and shaken the faith of how we live our lives, crystal-ball gazing may seem futile, but businesses always need to take some kind of view on the future.
While the emergence of a more highly transmissible Covid-19 variant has again aroused fears of further lockdowns, there are tentative signs to believe that in 2022 the worst of the pandemic will be behind us. For a start, the hugely successful vaccine rollout has saved millions of lives around the world. The booster campaign and the confidence of pharmaceutical companies that the vaccines can be adapted to fight variants, as well as the arrival of new therapeutic treatments, mean the days of strict lockdowns are likely to be a thing of the past, albeit the early part of 2022 is uncertain.
No matter what emerges we are in a much stronger position than a year ago
Should a repeat of 2021’s severe Covid wave be avoided, the global economy will continue to recover in 2022, allowing for the withdrawal of the economic stimulus programmes that have helped so many countries navigate the challenges of the past two years. It has been remarkable that economic activity has held up so well in many countries, buoyed by government assistance. While schemes to help the hardest-hit sectors are winding down, there is no doubt that many companies are not just surviving but thriving. Across many sectors, activity is well ahead of pre-pandemic levels.
Economic megatrends
Of course, the big economic themes that have dominated 2021 – supply bottlenecks, the difficulty in filling jobs, the return of inflation (which had been noticeably absent for more than a decade) – will continue in 2022. How businesses cope with these issues will be crucial, as combinations of these risks have the potential to derail economic growth. Policymakers will have to act skillfully and avoid knee-jerk reactions that could choke off growth.
Following on from the Cop 26 climate conference in Glasgow in November 2021, the issue of sustainability will be to the fore as we emerge from the pandemic. The pressure on companies and governments to live up to the promises they have made will be intense. The goal of reaching net zero for businesses, limiting the rise in global temperature to no more than 1.5 degrees above pre-industrial levels, and funding the huge changes that will come over the next few decades will require not just commitments, but firm details about how it will all be achieved.
Geopolitical problems
In the political world new flashpoints are emerging. Tensions between Russia and the western powers are mounting over Ukraine. This will be particularly important as new leaders in Europe step onto the world stage. German chancellor Olaf Scholz, replacing Angela Merkel after her 16 years in office, will have to lead here for Europe. And he may not be the only new face, with French president Emmanuel Macron facing a tough re-election battle in the spring. This is a crucial time for the European Union, which faces opposition to its authority from Poland and Hungary.
The year ahead may also define how relations between China and the rest of the world develop. There is no doubt China has exerted a much stronger influence on global affairs in the past couple of years, prompting the US, the UK and Australia to form a new security alliance. Its economic power abroad is growing, unleashing a backlash against Chinese companies in the US, a situation worsened by China’s development of advanced weapons technology. All of this will raise questions for businesses with an extensive presence in China.
While so much may seem uncertain and in a state of flux, comfort can still be taken in the fact that no matter what emerges we are in a much stronger position than a year ago.
