(Financial World) Looking forward to 2022: Can the global inflation warning be lifted?

　　China News Service, Beijing, January 7 (Liu Wenwen) In 2021, under the cover of the "black swan" of the epidemic, the global supply chain will be partially blocked, and the prices of bulk commodities will be soaring; in response to the impact of the epidemic, many countries have implemented large-scale fiscal policies. Stimulus policies have intensified inflation and brought huge uncertainty to the recovery of the global economy.

　　Looking back at 2021, the inflation rate of major economies continued to rise.

Since April 2021, the Fed has consistently characterized high inflation as "temporary", but the rising inflation rate in the following months has proved not to be the case, and the term "temporary" was finally abandoned.

　　According to data from the US Department of Labor, the US Consumer Price Index (CPI) in November 2021 increased by 0.8% month-on-month and 6.8% year-on-year, the largest year-on-year increase since June 1982.

The Federal Reserve announced at the last interest rate meeting in 2021 to accelerate the reduction of debt purchases, and the rate of reduction has doubled.

It is not difficult to see from this move that inflation has become a major constraint on the US economy.

　　Similarly, British inflation is also rising.

In November 2021, the British CPI rose 5.1% year-on-year, reaching a new high in the past ten years.

　　The inflation situation in emerging economies is also not optimistic.

As inflation and nominal interest rates in the United States rise, capital outflows and currency devaluations in high-debt emerging economies intensify, and the risks of debt crises and currency crises will further rise.

　　According to the Turkish Statistics Agency, Turkey's inflation in December 2021 increased by 36.08% year-on-year, far exceeding expectations and the largest year-on-year increase in the past 20 years.

　　Li Haidong, a professor at the Institute of International Relations at the China Foreign Affairs University, said in an interview with a reporter from China News Agency that while the epidemic has not yet ended, it is quite difficult to alleviate global inflation.

As the future international situation will be more turbulent, the difficulties in the flow of various elements in the process of globalization will continue to intensify, which will further affect confidence in consumption, investment, and foreign trade.

　　Li Haidong analyzed that, at present, the global supply chain is in a state of being extremely tight and in urgent need of transformation.

Affected by inflation, some countries, such as the United States, have to swing their supply chains to a direction that meets their own needs, but this will destroy and rebuild the global supply chain pattern that has been formed in the past 30 years. "Such a collision of ideas and practices It will be more intense in the future. When the supply chain is difficult to evolve smoothly, inflation will inevitably increase further."

　　Zhang Yuncheng, director of the Institute of World Economics of the China Institute of Modern International Relations, told a reporter from China News Agency that the world economy was in a deep recession under the 2020 epidemic, and rebounded rapidly in the first and second quarters of 2021. In the third and fourth quarters, the supply side was blocked and it fell into "Hemiplegia".

The serious imbalance between supply and demand is just the trigger for inflation. The fundamental problem is that developed countries must forcibly change the traditional supply chain structure.

"Therefore, in the short term, the contradiction between supply and demand will be resolved as the congestion of US ports is eased, and inflation will be eased. However, it should be noted that when the logic of globalization is forcibly changed and structural changes are triggered, this is the deadliest."

　　Given the continuing challenges on the supply side, how will global inflation behave in 2022?

　　Guan Tao, chief economist of Bank of China Securities, said that facts have proved that the inflation risk has been "underestimated" by everyone. In the medium and long term, I am afraid that the global inflation center will rise to a higher level in the future.

　　He believes that, firstly, currency overflight has given birth to greater inflationary forces; secondly, this “scar effect” brought about by the epidemic has caused people to rethink the relationship between work and life and reduce labor participation, which may have an impact on inflation. Enduring support.

　　Deutsche Bank’s forecast is also not optimistic, pointing out that the range of inflation has expanded and it will take longer to eliminate.

Rising basic inflation, high inflation expectations, and accelerating wage increases will all support inflation above the target in 2022.

With the restoration of the supply chain, the return of labor supply and the fact that commodity prices are still below the peak, inflation should fall back to near the target level before 2024.

　　In Zhang Yuncheng's view, in the face of inflation, the performance of various economies will continue to diverge.

From a global perspective, the impact of inflation on different economies can be simply described as "gray rhino" and "black swan."

For developed countries, such as the United States, which is undergoing quantitative easing, reducing the scale of debt purchases, and further moving toward raising interest rates, this is a visible "gray rhino."

　　He continued to analyze that for emerging market countries, inflation is clearly a "black swan" that continues to sharpen.

As a global credit currency, interest rate hikes in the U.S. dollar will bring about a revaluation of global asset prices, leading to tight liquidity in the global U.S. dollar. The recovery based on the previous large-scale release may collapse.

Emerging economies that are already facing debt and balance of payments difficulties will face greater risks when they encounter a huge global monetary policy shift.

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