Impact of Inflation on the World Economy and Key Sectors – Thematic Research
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Recessions across many developed markets (DMs) are expected before the end of 2022, which will in turn reduce the labor component of inflation. However, while this lowers input costs, it will lead to reduced demand as the pressure on consumers will increase. This is likely to see central banks ease on the current interest rate rising cycle, with the US likely to be the first developed market to see a return in consumer demand as disinflation helps to restore purchasing power.
The inflation outlook executive briefing thematic intelligence report analyzes the outlook for inflation and the implications for the global economy, major countries, regions, and key industry sectors. The report also includes expert opinions from industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world.
Impact of Inflation – Sector Analysis
Agriculture: Commodity prices have been rising since 2021 as the global economy recovered from COVID-19 lockdowns. The Russian invasion of Ukraine led to further price spikes for commodities that are exported from the region (wheat, corn/maize, and sunflower oil). While commodity prices have eased, input costs remain high due to the importance of fertilizer production and exports from Russia. Furthermore, high natural gas prices in Europe and supply uncertainty have restricted the ability of other fertilizer producers to expand.
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Automotive: The shortages of parts and vehicle components, and general disruption to supply chains are among the general underlying inflationary drivers. A deteriorating global economic outlook has helped drive prices down for industrial metals such as steel and aluminum, providing some cost relief to the auto industry. However, prices of electric-vehicle-focused commodities (lithium) remain elevated, principally through continued supply deficit concerns.
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Financial Services: Variable assets were favored during the pandemic as exceptionally low-interest rates tempted investors into financial markets despite the economic turbulence. However, growth is expected to decrease this year as the stock market corrects and sharp interest rate increases might put investors in a decidedly risk-off frame of mind.
Investment Allocations, Total Market Globally
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Consumer: Global consumers, while still adjusting to the recovery period of the COVID-19 pandemic, are now also experiencing financial concerns around inflation prices as wider economic uncertainty is pushing up the prices. Many consumers also have employment and salary concerns as jobs and wage increases are also affected as businesses feel the same pressures. All these factors are leading to tighter household budgets across markets with consumers having to choose which strategies they will employ to help see them through tough times.
For more insights on the impact of inflation on the consumer sector, download a free report sample
Retail: COVID lockdowns led to negative growth in 2020 and strong growth in 2021 as stores opened and performance was up against weak comparatives. Meanwhile, consumers were spending on occasions that had been postponed for two years including holidays. This boosts related products such as smart wear and holiday products, but as the year progresses and inflation increases, consumers will start to cut back on discretionary spending and focus on essentials.
UK – Sector Share (%) of Consumer Expenditure in Retail
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Scope
- The report analyzes the outlook for inflation and the implications for the global economy, major countries, and regions, as well as key industry sectors. This report includes expert opinions from our industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world.
- Provides detailed global macroeconomic outlook analysis.
- Covers detailed insights on the agriculture, automotive, financial services, consumer, and retail sector outlook.
Reasons to Buy
- Gain access to understanding the impact of inflation on the world economy and key sectors.
- View inflation outlook analysis and the implications on the global economy, major countries, and regions, as well as key industry sectors.
- Refer expert opinions from industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world.
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Table of Contents
Frequently asked questions
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What are the key sectors affected by inflation?
The key sectors affected by inflation are agriculture, automotive, financial services, consumer, and retail.
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What is the impact of inflation on the agricultural sector?
Commodity prices have been rising since 2021 as the global economy recovered from COVID-19 lockdowns. The Russian invasion of Ukraine led to further price spikes for commodities that are exported from the region (wheat, corn/maize, and sunflower oil).
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What is the impact of inflation on the automotive sector?
The shortages of parts and vehicle components, and general disruption to supply chains are among the general underlying inflationary drivers in the automotive sector.
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What is the impact of inflation on the financial services sector?
The growth is expected to decrease this year as the stock market corrects and sharp interest rate increases might put investors in a decidedly risk-off frame of mind.
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What is the impact of inflation on the consumer sector?
Global consumers, while still adjusting to the recovery period of the COVID-19 pandemic, are now also experiencing financial concerns around inflation prices as wider economic uncertainty is pushing up the prices.
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What is the impact of inflation on the retail sector?
As the year progresses and inflation increases, consumers will start to cut back on discretionary spending and focus on essentials.
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