Few will regret leaving in 2022. It was the year of a brutal attack by a vile despot on a peaceful neighbor. A year of rising inflation and declining incomes in a global cost-of-living crisis. Rising interest rates, a strong dollar and debt problems; according to data from the International Monetary Fund (IMF), sixty percent of low-income countries are in a debt crisis or are exposed to a high risk of it.
It was a year of falling property prices and great market volatility. A year of further distancing between the United States and China and the formation of competing blocs centered around the two superpowers, with Russia in China's camp. At the COP27 summit, no success was achieved in changing the emissions curve. There has not even been a full recovery from the dangerous outcomes of the covid pandemic, especially in the poorest countries of the world.
It's all bad. Worse may be yet to come, perhaps even much worse. Vladimir Putin is particularly unknown. As we have seen from the policy regarding covid the same is true for Xi Jinping shines. Who knows what kind of financial chaos Republicans may unleash on the US debt ceiling in 2023? Then, the question is, will the European Union really stay on the same path regarding Ukraine as interest rates rise, economies fall into recession and the debt crisis grows?
It's not all that bad after all. In 2022, there was light in the darkness. It should be celebrated before entering the next year.
The West is back. The invasion of Ukraine brought together those who share democratic values. For the NATO alliance, it was a year of rebirth. For Germany it was a zeitenwende (turning point). For Finland and Sweden, it was time to reject neutrality. Enchantment Donald Trump With Vladimir Putin, she failed to undermine American support for Ukraine. Volodymyr Zelensky won the propaganda war. He is the heroic leader that Ukraine - and the West - desperately needed.
Putin is not the only stalwart who looks weaker today than a year ago. The same goes for Xi and Trump. The policy of zero tolerance towards covid ended ingloriously. The claim of today's version of ancient Chinese despotism to rule more competently than chaotic democracies has failed. Iran's despots are under attack from the youth. Trump's candidates received significant blows in the mid-term elections, although it is comforting that he still has too many supporters. The Republican elite remains timid, but Congress has now fully exposed his attempted rebellion.
Meanwhile in tortured Britain, the value of democracy has also been proven. In fear of electoral defeat, the conservatives freed themselves in 44 days Boris Johnson, and then stunningly incompetent Liz Truss. Nobody died. Democracy is not perfect, especially when it takes the form of a referendum on topics that citizens cannot be expected to fully understand. However, they are learning: a recent YouGov survey showed that 51 percent of Britons regret Brexit, while only 31 percent still support it. That change will allow the next government to bring Britain back closer to the European Union.
Belatedly, but decisively, the Federal Reserve acted to bring domestic inflation under control in the US. In part because of this, inflation expectations remain under control. The pain is yet to come. However, there is a good chance that inflation in the US and other parts of the world will be brought under control in 2023. After that, economic growth should follow.
The rise in nominal and real interest rates shook the markets. The cyclically adjusted price/earnings ratio of the S&P 500 fell from 39 in December 2022, the second highest on record, to a recent low of 27. That's still well above the long-term average of 17. But it's progress. Markets also became noticeably more volatile, with some speculative assets weakening significantly. Bitcoin has fallen from a peak of $69.000 last year to $17.000. This proves that it is neither a unit of account nor a store of value. It was never a useful means of payment. As Bitcoin went, so did FTKS Sam Benkman Fried. Interest rates may not remain high in real or nominal terms. But their jumps reminded investors of the risk. It's good.
Globalization is not dead either. Indeed, outside the US, where grievances over unfair trade have reached epidemic proportions, most countries realize that they need trade to prosper. It is encouraging that the IMF predicts that the volume of world trade in goods and services will grow by 4,3 percent this year. Interestingly, this is faster than the growth of trade in goods of 2,9 percent: trade in services is at an advantage. This follows 10,1 percent growth in the volume of trade in goods and services and 10,8 percent growth in merchandise trade in 2021. Meanwhile, global gross domestic product is forecast to grow just 3,2 percent in 2022, after 6 percent in 2021. .
So the world is not in the process of deglobalization: trade is just not growing at the same speed as before. This is partly natural. Globalization cannot grow as before. But it still works. The world economy also continues to grow. Our ancestors would have thought it exceptional.
Finally, in some chaotic and poorly coordinated way, the world is leaving covid in its wake. Vaccines contributed to this to a large extent, although they were not distributed in the way they should have been. More severe strains are possible, and new pandemics are likely. However, this is progress.
It is easy to allow ourselves to be overwhelmed by the dangers, injustices, conflicts and failures in our world. Surely there are enough of them. But not everything that happened this year was catastrophic. For those of us who believe in democracy, the rule of law, continued economic progress, global economic integration, sound financial markets and monetary stability, 2022 wasn't all bad. However, let's hope that 2023 will be better. It has to be.
Prepared by: N. Bogetić
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