Most Industries Will Return To Pre-pandemic Levels In 2022

New report by Economist Intelligence Unit (EIU) forecasts growth and key risks in seven business sectors next year 

• EIU expects automotive and retail to continue recovering at a global level in 2022, taking demand back to 2019 levels. Tourism will fail to see a similar recovery, despite the reopening of borders.
• Technology and politics will continue to be interlinked with the semiconductor shortage persisting, making onshoring of chip production a strategic priority for countries.
• Supply-chain blockages will push up prices and interest rates and this will boost prospects for many financial firms in 2022, provided bad loans remain at manageable levels.
• Many energy companies will need to undertake an urgent review of their strategies in 2022, as governments and investors ramp up pressure to cut emissions.
• Vaccinating the world against Covid-19 (coronavirus) will remain a core priority, but healthcare systems will struggle to tackle a backlog of non-coronavirus care.

A new report from EIU forecasts growth and assesses key risks in seven business sectors for 2022, as they try to recover from the prolonged impact of the global coronavirus (Covid-19) pandemic. The report argues that although a recovery is now firmly underway, new risks are emerging, including climate change and higher taxes.

Ana Nicholls, Director of Industry Operations at EIU, says:

“The world will start to get back to near-normal during 2022, at least in developed countries. However, the pandemic will have lingering effects on both supply and demand, as well as prices. Governments have become more assertive, introducing taxes and regulations that will force many companies to rethink their strategy. The growing climate-change crisis will also seriously start to affect the way that companies do business, and the financing they can attract.”

While the report predicts a continuing recovery in most sectors, it also highlights five key issues that will shape these industries next year.

1. Supply-chain disruption will make it harder for manufacturers and retailers to meet recovering demand, dampening sales forecasts for both consumer goods and automotive.
2. This will keep many prices high and bring forward interest-rate rises. Although this could raise bad debt levels and dampen demand, some consumer companies and banks will turn higher prices to their advantage.
3. New technologies - both digital and non-digital - will offer new opportunities, but will also attract more attention from regulators keen to ensure a level playing field. Health apps will be among those affected.
4. Companies will need to prepare for changes in tax regulation, following a global deal to set a minimum corporate tax rate. Although this legislation may be derailed, efforts to collect taxes are increasing.
5. Amid efforts to combat climate change, companies will come under more pressure to cut emissions and meet more standardised reporting requirements. This will affect their investment strategies, particularly in the oil and coal sectors.

EIU’s report also provides key global forecasts for each of the seven industries:

• Global sales of new vehicles will rise by 7.5% in 2022, taking them back past 2019 levels, being led by the Asia and North America markets.
• In 2022 growth in retail volumes will slow to 3.3% when adjusted for inflation, but sales will finally exceed 2019 levels.
• Global energy consumption will rise by 2.2% as economies recover from the impact of the pandemic, with all types of energy, apart from nuclear power, benefitting.
• Robust GDP growth will boost activity for banks, payment processors, insurers and fund managers in 2022, but inflation will be a major risk.
• Global healthcare spending will rise by 4.1%, year on year, in 2022 as countries rise to the diverse challenges of coronavirus and non-coronavirus care.
• Of 60 major telecoms markets, 16 will launch 5G services in 2022, but challenges in spectrum availability and pricing will cause delays.
• Tourism will recover some ground as borders reopen but international arrivals will remain 30% below 2019 levels.

The full report is available to download here.

© Scoop Media